Crypto Shorts Worth $120M Liquidated In Single Day After Bitcoin, Ethereum Spike As Court Rules In Favor Of Grayscale Over SEC

The cryptocurrency market experienced the liquidation of crypto shorts worth a staggering $120 million within a span of 24 hours. 

What Happened: This sudden development came as prices of Bitcoin BTC/USD, Ethereum ETH/USD, and various altcoins saw a surge, triggered by a recent US appeals court ruling. 

In a Tuesday ruling, the court ruled in favor of Grayscale in a lawsuit against the Securities and Exchange Commission (SEC). The lawsuit challenged the SEC’s denial of the company’s application to convert the Grayscale Bitcoin Trust GBTC into an ETF.

The aftermath of this ruling resulted in Bitcoin witnessing its largest daily gain in several months, with a surge of over 7%. Market sentiments were buoyed by this positive momentum, especially within an industry that has faced a barrage of regulatory enforcement actions, bankruptcies, and lawsuits in recent times.

Judge Neomi Rao, who presided over the case, deemed the SEC’s denial of the ETF as “arbitrary and capricious.” She criticized the agency for failing to provide a substantive explanation for its inconsistent treatment of similar financial products.

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Why It Matters: Data provided by CoinGlass reveals that within the said 24-hour period, Bitcoin shorts worth $50.71 million were liquidated, alongside the liquidation of long shorts amounting to $24.91 million. Moreover, a staggering total of 46,806 traders faced liquidation, resulting in a combined liquidation value of $171.92 million.

Crypto liquidation refers to the process of closing out or selling off positions in the cryptocurrency market. When a trader enters into a short position, they are betting on the price of a cryptocurrency going down. If the price rises instead, the trader may face a liquidation event, resulting in the automatic closure of their position. Conversely, a long position is taken when a trader anticipates a price increase, and liquidation occurs if the price falls below a certain threshold, leading to the automatic closure of their position.

The largest individual liquidation order occurred on Binance, involving ETH with a value of $2.15 million.

Could this decision impact other companies that want to create Bitcoin ETFs, like BlackRock and Fidelity? The answer isn’t that simple. All your questions will be answered at Benzinga’s Future of Digital Assets event happening in NYC on Nov. 14, 2023. Brace yourself for riveting discussions where you won’t just be a passive spectator. You’ll have the opportunity to directly interact with the industry experts themselves at this closed-door event. Don’t let this chance slip away – secure early bird discounted tickets now!

Price Action: At the time of writing, BTC was trading at $27,402.01, up 5% in the last 24 hours, according to Benzinga Pro.

Photo by FellowNeko on Shutterstock

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