Investors and cryptocurrency market analysts are on alert over the possibility of a repeat of Ethereum's (ETH) recent volatility, which could result in significant liquidations. More than half a billion dollars in long Ether positions are at stake if the cryptocurrency experiences price fluctuations similar to those experienced over recent weekends.
Ether, one of the main cryptocurrencies by market capitalization, has recorded abrupt variations in its value in recent weeks. Specifically, a 2,25% drop took the price to $3.036 on April 20, while the previous Saturday, a nearly 9% decrease dropped the value to $2.950, before a recovery to $3.075. Currently, the price of Ether is around US$3.131 with a 1% increase.
Market instability is amplified by regulatory uncertainty, especially with the expectation that the U.S. Securities and Exchange Commission (SEC) may reject applications for spot Ether exchange-traded funds (ETFs) in May. Concerns have been intensified following reports of meetings between ETF issuers and the SEC, which appear to indicate an unfavorable trend towards the approval of Ether-based products.
In a recent report, analysts point out that a further drop of just 2,25% in the current price of Ether could trigger liquidations worth US$510 million. If a more severe decline occurs, similar to the 9% drop seen previously, settlements could reach a staggering US$853 million.
At the same time, legal challenges add more pressure to the environment for Ethereum and its investors. On April 25, software development company Consensys initiated legal action against the SEC and its five commissioners. The company claims that the agency plans to “regulate ETH as a security,” further intensifying market uncertainty.
