Traders rush to short Ether as Grayscale pulls its futures ETF plan

Ether ( ETH ) traders have stacked up their short positions over the last 24 hours, just as Grayscale Investments pulled its application for an Ethereum futures exchange-traded fund (ETF).

Ethereum is hovering close to a key support level at $3,010, having dropped by 1.85% over the past 24 hours, as per CoinMarketCap data .

However, liquidation maps show traders have more conviction that the price is going down in the near term — with $345 million in short positions set to liquidate if the price goes upward by 3%.

On the other hand, a 3% drop to $2,920 would only wipe $237 million in long positions.

Liquidation dataTraders are anticipating further decline for Ether's price according to lSource: CoinGlass

It comes amid Grayscale’s decision on May 7 to withdraw its Ethereum futures ETF application , just three weeks before the United States Securities and Exchange Commission (SEC) was set to decide on it.

It also comes as questions have been raised about whether Ethereum could be classified as a security and the fate of spot Ethereum ETFs later this month.

Though there was optimism earlier in the year, analysts are becoming increasingly skeptical about its chances as the May 23 date approaches.

The sentiment among the crypto community is similar. According to the New York-based crypto predictions platform Polymarket, 92% of participants believe the spot Ethereum ETF will be denied next month.

Polymarket participants are not optimistic about the chances of spot Ethereum ETF approval by the end of May. Source: Polymarkets

Alongside this, there are also broader concerns over Ethereum’s overall usage and lack of speculative interest from short-term holders (STH).

“Usage of Ethereum is currently so low, that their burn mechanism is not keeping up with issuance to validators,” crypto onchain analyst James Check aka “Checkmatey” said in a May 7 post on X.

On May 8, Glassnode said Ethereum’s under-performance this cycle relative to Bitcoin is due to a “measurable lag in speculative interest” from the STH cohort.

However, just days before the news, some traders were optimistic that Ether’s price could experience a breakout by the end of the year.

“Similar fractal as of Q4 of 2020, Breakout could happen in Q3 of 2024 as per historical pattern,” pseudonymous crypto trader Ash Crypto told his 1.1 million followers on May 6.

“Ethereum is presently moving within a falling wedge pattern, with its price testing a notable support zone. Anticipate possible sideways movement around this support area,” pseudonymous crypto commentator TheCryptoPalace told their 20,400 X followers on May 1.

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