The excitement surrounding the approval of several spot-based Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) has been met with a dampened response from the broader crypto market, triggering significant volatility and resulting in staggering losses totaling over $400 million.

Data from CryptoSlate underscores the pervasive downturn, with the top 20 digital assets by market capitalization, excluding stablecoins like Tether’s USDT and Circle’s USDC, witnessing losses exceeding 3% each. Bitcoin and Ethereum, the market leaders, suffered notable declines, with Bitcoin plummeting to $67,051 and Ethereum to $3,671, respectively.

Market analysts attribute the lackluster market performance to the phenomenon known as a "sell-the-news" event, suggesting that investors had already priced in the anticipated approval of the ETH ETFs. In the days leading up to the SEC's announcement, Ethereum's price surged by over 20%, culminating in a one-year high of 3.6 million ETH in the futures market, as observed by CryptoSlate.

Julio Moreno, head of research at CryptoQuant, remarked on the market's preemptive response, noting the significant narrowing of the discount between Grayscale’s Ethereum Trust (ETHE) and ETH in anticipation of the ETF approval. Similar patterns were observed in the lead-up to the approval of Bitcoin spot ETFs.

Furthermore, experts highlight the delayed launch of the ETFs as a contributing factor to the subdued market reaction. While the SEC has granted approval for the ETFs, the clearance to launch is pending pending an approved S-1 filing, a procedural step expected to take a couple of weeks, according to Bloomberg’s ETF analyst James Seyffart.

The market downturn has not spared traders, with over 107,000 individuals suffering losses exceeding $400 million during the period of subdued market performance. ETH long traders, buoyed by expectations of a price surge following the ETF news, bore the brunt of these losses, totaling approximately $107 million. Among the notable liquidations was a $12.4 million long position on Ethereum on the Binance exchange.

Meanwhile, Bitcoin traders incurred losses totaling around $75 million amid the market tumult. The aftermath of the Ethereum ETF approval serves as a sobering reminder of the inherent volatility and unpredictability of the cryptocurrency market, underscoring the importance of prudent risk management strategies in navigating its tumultuous terrain.