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ETH bulls rally: Grayscale’s legal win boosts open interest, sentiment

3min Read

ETH, like most cryptocurrencies, set out on a bullish journey post Grayscale’s win against the SEC. A rise in open interest added to the bullish narrative.

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  • ETH breaks out of limbo thanks to Grayscale’s win against the SEC.
  • ETH derivatives demand registers spike along with shorts liquidations.

ETH bulls have finally made a statement after more than a week of uncertainty in terms of market direction. The newfound bullish momentum was courtesy of a favorable judicial decision involving ETFs.

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The Ethereum native cryptocurrency showed signs of low momentum and low volatility in line with the overall crypto market last week. However, the last 24 hours indicate a return of volatility and in favor of the bulls.

ETH traded at $1,728 which represents an almost 5% upside within the last 24 hours at press time.

ETH price action

Source: TradingView

A bullish outcome may have been more likely after ETH’s dip into oversold territory. However, the market was covered by a crowd of uncertainty due to inflation-related FUD. A catalyst was thus necessary to strengthen the market confidence, hence the likelihood of a bullish outcome.

The real reason behind the rally

Tuesday’s bullish volume was not a fluke but rather the result of reports that Greyscale won a legal battle against the U.S. Securities and Exchange Commission (SEC). The investment management previously filed a lawsuit against the U.S. regulator over the denial of an ETF application. ETH was among the cryptocurrencies that saw a robust wave of bullish volumes following the announcement.

The ruling may give Grayscale’s ETF application a chance at possibly being approved. The market reacted with bullish excitement because an approved ETF would allow institutions to legally own cryptocurrencies, thus resulting in a wave of institutional demand.

The ruling also means there is a significant chance that the SEC might make a fairer decision on recently filed ETF applications.

Read Ethereum’s [ETH] price prediction 2023-24

The newfound confidence in the market courtesy of the Grayscale win rejuvenated the demand for top cryptocurrencies including Ethereum. According to X-based analyst Ali, open interest registered a massive spike following the judicial decision.

A closer look at ETH’s open interest confirmed that there was a pivot in the metric. It confirmed a bit of an uptick back to 18 August levels. This also means that the open interest level was still considerably lower than it was at its mid-month levels.

Bitcoin open interest and estimated leverage ratio

Source: CryptoQuant

The bullish pivot also resulted in short-leveraged position liquidations. As a result, this added to the buying pressure in the market, as liquidated traders were forced to buy to cover their downside.

Glassnode alerts revealed that ETH futures contracts short-positioned soared to a new monthly high on Ethereum in the last 24 hours.


Michael is a full-time journalist at AMBCrypto. He has 5 years of experience in finance and forex and more than two years as a writer in the crypto and blockchain segments. Michael's writing at AMBCrypto is primarily focused on cryptocurrency market news and technical analysis. His interests include motorcycles and exotic cars.
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