Traders Take Neutral Stance After Ethereum Futures See Massive Selloffs

ETH price fell to a 4-month low of $1,070 after a flurry of futures sell-offs.

Market analysis

The price of Ether (ETH) fell by around 33% between November 7 and 9 after the liquidation of a staggering $260 million in futures contracts (buyers). Traders using leverage were surprised as the price fluctuation caused the biggest impact since August 18 on derivatives exchanges.

Ether/USD 4 hour price at Bitfinex . Source: TradingView

The $1,070 price level traded on November 9 was the lowest since July 14, marking a 44% correction in three months. This unfavorable price development was attributed to the insolvency of the FTX exchange on November 8 after client withdrawals ceased.

It should be noted that a 10.3% 1-hour pump occurred on November 8, just before the strong correction. The price action mimicked the moves of Bitcoin (BTC), as the major cryptocurrency took a quick jump to $20,700, but then fell towards $17,000 in a 3-hour window.

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The former vice-leader of futures open interests shared a disguised and toxic relationship with Alameda Research, a hedge fund and trading firm also controlled by Sam Bankman-Fried.

Multiple questions arise from the insolvency of FTX and Alameda Research, focusing on regulation and contagion. For example, U.S. Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson said on Nov. 9 that the recent case demonstrates the sector needs greater oversight. Additionally, Paolo Ardoino, Chief Technology Officer of the Tether (USDT) stable...