As Grayscale Investments pulled its application for an Ethereum futures exchange-traded fund (ETF), traders stacked up their short positions during the last 24 hours.
Ether is hanging near the crucial support level at $3,010, having lost 1.85% over the past 24 hours, per CoinMarketCap data.
However, the liquidation maps clearly show that traders have more conviction about the price going down in the near term, with $345 million in short positions set to liquidate if the price goes up by 3%.
On the other hand, if there's a 3% drop to $2,920, it would only mean that a total of $237 million in long positions is wiped out.
This follows Grayscale's May 7 decision to withdraw its Ether futures ETF application, just three weeks before the United States Securities and Exchange Commission (SEC) was set to rule on it.
There's also speculation over whether Ether could be classified as a security and what will happen to future spot Ether ETF applications later in May.
Although analysts were highly optimistic earlier in the year, the approaching deadline seems to have left them less hopeful about the SEC approving a spot Ether ETF.
Sentiment among the crypto community isn't any different. For instance, New York-based crypto predictions platform Polymarket suggests a 88% probability that traders betting on the outcome think spot Ether ETFs will be denied.
There are broader issues regarding Ethereum's overall usage and a 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 on-chain analyst James Check, aka “Checkmatey,” said in a May 7 post on X.
Glassnode said Ether's underperformance this cycle, compared to Bitcoin, may be due to "a measurable lag in speculative interest" from the STH cohort.
However, just days before this news, some traders were optimistic that Ether could break out by the end of 2024.
"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 now trending in a falling wedge pattern, with its price testing an important support zone. Expect lateral movement around this support area," pseudonymous crypto commentator TheCryptoPalace told their 20,400 X followers on May 1.
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