Ether’s price fell by about 19.6 percent on the 18th of April, and it results in the massive quick liquidation of long futures contracts worth about a billion dollars. In spite of the size of the liquidation experienced and the impact it has on ETH price, the open interest on futures is still sitting above 20.5 billion dollars (about 5% less than the past month).
Immediately after the sell-off, it was quite obvious that the sentiment of the investors deteriorated as it became evident in the derivatives markets.
In history, investors borrow more for going bullish on ether than they do for going bearish. In the last couple of days, the ratio of short to long has changed remarkably, dipping to its lowest ever since December 2018. Hardly could any news justify the notable price correction that happens as there is no connection of ETH with the public listing of Coinbase, the fall in mining hash rate of BTC, or Jim Cramer’s statement against BTC.
In all these, there are reasons for investors to worry about unfavorable crypto regulation. Just in the last weekend, there is unconfirmed news that the Department of Treasury of the United States would begin to charge for money laundering. The main focus will be on financial firms that have engaged in cryptocurrencies.
Unfavorable Regulatory Environment making Many Go Short
Also, in February, the secretary of the department of treasury, Janet Yallen, who is a well-known critic of crypto, noted the use of crypto for criminal and illicit activities as an increasing concern. The Financial Crimes Enforcement Network of the Treasury has signaled that digital currencies could be added to the report of the foreign transactions and accounts.
The move, if successful, could see that filing annual reports of Financial accounts and Foreign banks by an individual would be required for cryptos that are held in foreign exchanges. The increased interest of investors, therefore, could have been caused by the changes in the regulatory environment.
Another reason for investors to tread carefully is the congestion in the Ethereum network. Over the previous months, the transaction charges have been about $16 on average, which makes it a bit infeasible for individuals to process unsubstantial trades. Irrespective of all these, there are indications that the price of ETH is on its way to a fresh ATH.