Crypto Markets Drop Following Ethereum ETF Approvals

Traders ‘sell the news’ after the SEC approves eight exchange-traded funds backed by spot Ether.

Crypto markets traded lower after the SEC approved eight exchange-traded funds backed by spot Ether on Thursday.

The much-anticipated approval, initially expected to boost the market further, turned into a “sell-the-news” event, leading to an overall market drop.

ETH dropped by 4% following the approval after rallying 20% over the past week. The world’s largest cryptocurrency, Bitcoin, also continued its downward trend, dropping 6%, while Solana was down 5%.

Benjamin Cowen, CEO of ITC Crypto, finds it comical that people are upset about ETH’s lack of movement. “ETH is up more this week than the S&P 500 typically gives you in a year.”

According to crypto analyst Zach Rynes, the lack of upside momentum means that “everyone who wanted to buy the approval already did.”

The exchanges involved — NYSE Arca, Nasdaq, and Cboe BZX — applied for rule changes to list and trade Ether ETFs. They received approval to trade multiple Ethereum-based ETFs, including Grayscale Ethereum Trust, the Bitwise Ethereum ETF, BlackRock’s iShares Ethereum Trust, the VanEck Ethereum Trust, the ARK 21Shares Ethereum ETF, the Invesco Galaxy Ethereum ETF, the Fidelity Ethereum Fund, and Franklin Templeton’s Franklin Ethereum ETF.

Data from CoinGlass shows that 104,585 traders were liquidated in the past 24 hours for a total of $380 million. The largest single liquidation order occurred on Binance in the ETH-USDC pair, valued at $12.41 million. Over $105 million in long positions were liquidated in the last 24 hours.

Long liquidations occur when traders betting on price increases are forced to close their positions due to falling prices, leading to automatic sell-offs.

Meme coins are mixed today, with Dogecoin and PEPE rallying 3%, while Shiba Inu, FLOKI, and Dogwifhat dropped between 1% and 3%.

The DOGE price action comes as Kabosu, the dog that inspired the Dogecoin meme in 2013, has passed away. Her owner, Atsuko Sato, a 62-year-old kindergarten teacher from Sakura in Chiba Prefecture, Japan, confirmed the news in a blog post on Friday.

U.S. stock markets posted gains ahead of the Memorial Day long weekend. The Dow added 0.2%, while the S&P 500 and Nasdaq rose by 0.6% and 1%, respectively.