News flow suggesting that the Securities and Exchange Commission (SEC) in the US will definitively give the green light to the Ethereum futures ETF hit the traders who had opened short positions on the altcoin king Ethereum (ETH). This led to a liquidation of $11 million with the rise in ETH price.
With the news flow that the Ethereum futures ETF will definitively receive approval from the SEC, the price of ETH increased by 5% and the trading volume of the altcoin also increased by 25% during the same period. At the time of writing this article, ETH was trading at $1,676, surpassing its gains by more than 6% since the beginning of the week.
The price of the altcoin shows an upward trend due to the expectation that the futures ETF, which is limited in options for traditional financial players in terms of trading, will receive approval from the SEC and increase demand. Bloomberg ETF analyst Eric Balchunas said that the Ethereum futures ETF will most likely be launched in early October (90% probability). Balchunas later tweeted, referring to reliable sources, that the SEC wants to expedite the approval process for the futures ETF.
VanEck, with $77.8 billion in assets under management, announced that it is ready to launch the Ethereum futures ETF, which will trade on commodity exchanges registered with the US Commodity Futures Trading Commission (CFTC), by investing in standardized cash-settled ETH futures contracts. The investment fund will be listed on CBOE as the VanEck Ethereum Strategy ETF (EFUT).
The rise in ETH price has caused traders who opened short positions, expecting the price to fall, to become targets. Coinglass data shows that approximately $11 million worth of short positions were liquidated in Ethereum futures contracts on cryptocurrency exchanges. This figure accounts for about 85% of the liquidations that occurred on September 28.
Liquidation refers to the forced closure of an investor’s leveraged position by a cryptocurrency exchange due to the investor partially or completely losing their initial margin. This occurs when the trader cannot meet the margin requirements for their leveraged position or does not have enough funds to keep the trade open.
Data shows that futures traders on OKX accounted for one-third of the liquidations, followed by Binance and Huobi.