$120 million in shorts liquidated following Grayscale ruling

Derivatives trailers took a wash on a sudden influx of volatility following the Grayscale ruling

article-image

AdolescentChat/Shutterstock modified by Blockworks

share

Following a historic ruling that may clear the path for an eventual spot bitcoin ETF, traders holding short positions have been liquidated to the tune of $120 million in just 24 hours. 

On Tuesday, a panel of three judges from the DC Circuit Court of Appeals sided with asset management company Grayscale in their June 2022 suit against the US Securities and Exchange Commission, which centered on whether the $50 billion firm could convert its Bitcoin investment trust to a direct exchange traded fund (ETF). 

In an email to Blockworks, an SEC spokesperson wrote, “We are reviewing the court’s decision to determine next steps.” Nonetheless, many observers have said that the ruling paves the path to an eventual Bitcoin spot ETF.

In anticipation of fresh inflows from Wall Street investors, prices across the cryptosphere ripped higher on the news. Ether (ETH) rose as much as 5.5% and bitcoin (BTC) by 7.2% in a broad-based rally.

Read more: Court grants Grayscale’s petition for review in bitcoin ETF case against SEC

The volatility proved to be particularly troublesome for derivatives traders. Per data from Coinglass, $169 million in positions were liquidated, with short positions accounting for nearly two-thirds at $120 million. The liquidations were the most since Aug. 16 when over $1 billion in positions were wiped as the market crashed. 

The wipeout hasn’t stopped new traders from piling in, however. According to DeFiLlama, the amount of open interest on-chain increased 150% in the past 24 hours on Ethereum alone, with total cross-chain derivatives volume reaching over $2.5 billion. 

Additionally, according to Velo, during a four-hour period on Tuesday the total open interest increased nearly tenfold from $3.8 billion to $34 billion. 

Despite another strong ruling as a court dismissed a class-action suit against the Uniswap developers, prices have largely drifted lower on Wednesday. Bitcoin has fallen to $27,200 from a peak of $27,850 earlier in the day.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million