Imminent Bitcoin ETF Approval Causes $100M Loss for Bears

• Bitcoin Shorts Lose More Than $100 Million Amid ETF Approval Anticipation
• OKX and Binance Traders Suffer The Most
• What Does Liquidation Mean?
• Significance of Large Liquidations
• Potential ETF Issuance Heats Up
• Anticipated SEC Decision

Bitcoin Shorts Lose More Than $100 Million Amid ETF Approval Anticipation

Over the past 24 hours, traders betting against a rise in bitcoin (BTC) prices have suffered a loss of over $100 million. The loss comes in the wake of growing anticipation for the impending approval of a spot bitcoin exchange-traded fund (ETF) in the US. Bitcoin$42,260 -0.64%'s price soared by as much as 9% on Monday, marking a rise above $47,000 for the first time since March 2022, before retracing some of those gains.

OKX and Binance Traders Suffer The Most

Traders on the cryptocurrency exchange OKX bore the brunt of the losses, amounting to $84 million, followed closely by losses on Binance totaling $71 million. These losses came as open interest, or the number of unsettled futures contracts, rose by more than 8% in the last 24 hours. This indicates that traders opened more positions after the liquidation event, possibly in expectation of continued volatility.

What Does Liquidation Mean?

Liquidation occurs when an exchange forcefully closes a trader's leveraged position due to a partial or total loss of the trader's initial margin. This action takes place when a trader fails to meet the margin requirements requisite for a leveraged position, meaning they do not possess sufficient funds to keep the trade open.

Significance of Large Liquidations

Large liquidations can serve as an indicator of an impending steep price movement, thereby offering traders the opportunity to position themselves accordingly. This information is highly beneficial for traders, as it sends a signal of leverage being effectively wiped out from popular futures products. It also acts as a short-term indication of a decrease in price volatility.

Potential ETF Issuance Heats Up

These market developments occurred as potential ETF issuers, from BlackRock to Grayscale, submitted their offering fees to the U.S. Securities and Exchange Commission (SEC) on Monday. This represents one of the final stages before the first-ever bitcoin ETF can be launched in the US. Thirteen proposed ETFs are currently awaiting SEC approval, fueling competition for customers, with some issuers offering no fees for the first six months or up to $5 billion in assets under management (AUM).

Anticipated SEC Decision

The SEC is expected to make its final decision regarding ETF approvals or denials on Wednesday. Reportedly, SEC officials have issued comments to prospective issuers on minor details in the amended S-1 forms, with the expectation that these forms will be filed on Tuesday, according to a source familiar with the matter.

Edited by Jonathan Stoker