Bitcoin Surges Over $71K as Ether ETF Hopes Lead to $260M in Short Liquidations

Renewed hopes for US-listed Ethereum ETFs are driving the crypto market higher and liquidating downside short positions.

Bloomberg analysts raised the approval probability to 75%, boosting market sentiment.

Bitcoin {{BTC}} rose above $71,000 early Tuesday, with Ethereum rising over 19% to $3,700 after Bloomberg analysts raised the probability of the spot ETH exchange-traded fund (ETF) approval in the U.S. to 75%. It has reached its highest level since then. .

Other majors posted relatively smaller gains, with XRP, Cardano’s ADA, Solana’s SOL, and dogecoin (DOGE) gaining between 3-6%, according to CoinGecko data.

The sudden rise caused over $260 million in market-wide short liquidations; this is the largest since February 28. According to Coinglass data, Ether short positions lost over $115 million, followed by Bitcoin short positions losing just over $99 million.

Crypto exchange Binance was the largest among its peers with liquidations of over $130 million, followed by OKX with $118 million and Huobi with $51 million.

Shorts are bets against large price movements. Liquidation means that an exchange forcibly closes an investor’s leveraged position due to partial or complete loss of the investor’s initial margin. This occurs when a trader cannot meet the margin requirements for a leveraged position (does not have sufficient funds to keep the trade open).

Markets began to recover late Monday, with Bloomberg analysts Eric Balchunas and James Seyffart upping the possibility of a spot Ethereum ETF from 20% to 75%. Later, CoinDesk reported that the U.S. Securities and Exchange Commission (SEC) was asking willing Ether exchange-traded fund exchanges to update their 19b-4 filings before this week’s important deadline.

Update: @JSeyff and I’m raising our odds of spot Ether ETF approval to 75% (up from 25%), I’m hearing rumors this afternoon that the SEC might do a 180 on this (increasingly political issue), so now everyone’s scrambling (everyone like us as he assumed) they would be rejected). See… https://t.co/gcxgYHz3om

— Eric Balchunas (@EricBalchunas) May 20, 2024

Market participants view the approval of an Ethereum ETF as a bullish event that opens the floodgates to institutional capital. The spot Bitcoin ETF, which began trading in January, has attracted a total of $12 billion in inflows into BTC, with top trading firms and sovereign funds among its holders.

Meanwhile, some traders expect Ethereum prices to rise further in the coming days.

“Our view is that the spot is unlikely to settle here, with approval pushing us closer to 4k and rejection moving us back to 3k,” Singapore-based QCP Capital said in a release on Tuesday. “Exchanges are being asked to update their 19b-4 filings on an expedited basis, indicating that approval is imminent.”