After the grayscale ruling, $120 million short positions were liquidated.

Author: Andrew Thurman, Blockworks; Translation: Song Xue, LianGuai

Following a historic ruling that could pave the way for the final approval of a spot Bitcoin ETF, short traders were liquidated for $120 million in just 24 hours.

On Tuesday, a panel of three judges from the Washington D.C. Circuit Court of Appeals sided with asset management company Grayscale in a lawsuit filed by the U.S. Securities and Exchange Commission in June 2022, focusing on whether the $50 billion company can convert its Bitcoin investment trust fund into a direct exchange-traded fund (ETF).

A spokesperson for the SEC wrote, “We are reviewing the court’s decision to determine the next steps.” Nonetheless, many observers believe that this ruling paves the way for the final approval of a Bitcoin spot ETF.

With the anticipation of new funds flowing in from Wall Street investors, the prices of the entire cryptocurrency market surged on this news. Ethereum (ETH) rose 5.5%, Bitcoin (BTC) rose 7.2%, and the crypto market as a whole saw a significant increase.

It turns out that volatility is particularly troublesome for derivatives traders. According to Coinglass data, $169 million in positions were liquidated, with short positions accounting for nearly two-thirds, or $120 million. This liquidation is the largest since August 16, when the market crashed and over $1 billion in positions were wiped out.

However, the losses did not deter new traders from entering. According to DeFiLlama, the number of open positions on Ethereum alone increased by 150% in the past 24 hours, with the total trading volume of cross-chain derivatives exceeding $2.5 billion.

In addition, according to Velo’s data, the total value of open positions increased nearly tenfold within four hours on Tuesday, from $3.8 billion to $34 billion.

Despite dismissing a class-action lawsuit against Uniswap developers and making another strong ruling, prices plummeted on Wednesday. Bitcoin fell from a peak of $27,850 earlier in the day to $27,200.

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