Shades of grey: recent relatively large ETH declines may be due to excessive long positions in perpetual futures, with leveraged traders leading liquidation in Asian markets

GrayScale analysis suggests that one of the reasons for the relatively large decline in the price of Ether appears to be an excessive long position in perpetual futures. in May 2024, on the occasion of the U.S. Securities and Exchange Commission's (SEC) approval of the issuer's 19b-4 filing for a U.S. spot Ether exchange-traded product (ETP), traders significantly increased their total position in perpetual futures, perhaps anticipating further price increases following full regulatory approval; this approval took place in July 2024, when the U.S. spot Ether exchange-traded product (ETP) was approved by the U.S. Securities and Exchange Commission. Prices rose further after receiving full regulatory approval; this approval occurred in July 2024, and the U.S. spot ethereum ETP began trading shortly thereafter. The price decline has been accelerated by the liquidation of some of these long positions in the recent decline. on 4 August, the price of ethereum fell by 7.6% in just three minutes, with liquidations in perpetual futures totalling $340 million on that day alone. the price of ethereum fell by 7.6% in just three minutes, with liquidations in perpetual futures totalling $340 million on that day alone. Liquidation appears to have been led primarily by leveraged traders in Asia, as the sell-off occurred during the overnight US trading session and there was a large discount between Coinbase and Coin's spot price.