ETH Bull Rally: Grayscale’s Legal Victory Boosts Open Interest

ETH bulls have decisively prevailed after a period of uncertainty that lasted over a week, leading the cryptocurrency market in a more optimistic direction. This resurgence of optimistic sentiment was largely attributed to a positive legal ruling related to exchange-traded funds (ETFs), which served as a catalyst for the market’s newfound confidence.

In the previous week, Ethereum’s native cryptocurrency had shown signs of limited momentum and subdued volatility, reflecting the overall market sentiment during the period. However, the last 24 hours saw a significant increase in volatility, favoring the bullish side of the equation.

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At the time of writing, the price of ETH is at $1,728, reflecting an impressive increase of almost 5% within the last day

The ETH chart showed a clear shift towards a bullish trend, possibly due to ETH’s previous descent into oversold territory. Despite this constellation, the market remained mired in uncertainty due to inflation fears, resulting in a cloud of caution hanging over investor sentiment. Given this scenario, a catalyst was needed to renew market confidence, leading to prospects of a bullish upswing.

When one gets to the heart of this recent rally, it becomes clear that Tuesday’s surge in upside volume was anything but coincidental. Rather, it’s all about reports suggesting that Grayscale has won a legal victory against the U.S. Securities and Exchange Commission (SEC). The investment management company had previously filed a lawsuit against the SEC’s rejection of an ETF application, with ETH seeing a sharp rise in bullish volumes among cryptocurrencies following the announcement.

The implications of this ruling are significant, potentially paving the way for Grayscale’s ETF application to be approved. The market’s positive reaction was based on the realization that an approved ETF would allow institutions to legally hold cryptocurrencies, triggering a surge in institutional demand.

Furthermore, this ruling has the potential to set the stage for a more balanced and fair decision-making process regarding recently submitted ETF applications

The new surge in market confidence attributed to Grayscale’s legal victory has effectively revived demand for leading cryptocurrencies, including Ethereum. Well-known crypto analyst Ali pointed out that the court decision triggered a significant surge in open interest, indicating a new momentum in the market.

A closer examination of Ethereum’s open interest confirmed a discernible turnaround in this metric. This pivot marked a slight upswing reminiscent of the levels observed on August 18, although it is still worth noting that the current open interest level is still below the mid-month figures.

The impact of this uptrend was also felt in the leveraged positions, which led to the liquidation of short positions. This in turn increased buying pressure in the market as traders, forced to cover their losing positions, bought assets.

Glassnode alerts further clarified the situation, revealing that ETH futures contracts with short positions had risen to a new monthly high within the last 24 hours.

In conclusion, Ethereum’s recent uptrend follows a positive legal ruling related to ETFs. This court decision has boosted market confidence and revived demand for major cryptocurrencies like Ethereum. The impact also extends to potential institutional participation driven by the prospect of legal ownership through ETFs. Despite the volatility and prior market uncertainty, this legal victory has proven to be a decisive force in moving the market in a more optimistic direction.

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(Featured image by elifxlite via Pixabay)

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First published in Coin Kurier. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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