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Ethereum Hits 3-Month High: Is ETH Ready to Outshine Bitcoin?
Since Bitcoin’s dominance stopped, Ethereum is finally experiencing a breakout day. With its recovery to the $3,300 mark, ETH raised the prospect of a much bigger run. With a three-month high of $3,359.11, ETH recovered some of its losses from the March and April decline. After months of poor performance against BTC, it is unclear if ETH will increase even more.
Ethereum Recovery Sparks Hopes of a Full Altcoin Season
Hopes for a complete altcoin season, or at least a spillover to the Ethereum ecosystem, were also raised by the recent recovery of ETH. After months of relative weakness, ETH just broke out, raising hopes that it may repeat past bull rallies and end up at a much higher range.
Derivative trading has been the main driver of the current ETH rally. Over $22 billion was the most open interest in cryptocurrency exchanges in three years. After months of little trading activity and open interest below $10 billion, the breakout in open interest for ETH indicates that the asset is finally viewed as more active.
Ethereum Open Interest Hits 65% Longs: Are Traders at Risk?
The open interest in long bets is currently at roughly 65% because traders are wary of drawdowns. ETH has now surpassed the DeFi protocols’ liquidation levels by a significant margin. Since the initial substantial liquidation criteria are as little as $1,600, the majority of lending protocols are extremely safe.
There may be more liquidations for ETH traders as a result of the current surge in open interest. Almost no short positions remain to attack. Therefore, long positions may be more vulnerable. In order to sell off more than $59 million in long bets, ETH might drop to $3,200 based on the current liquidity accumulation.
ETH Becomes Liquidation King With $196M Wiped in a Single Day
The majority of short positions in ETH were eliminated during the surge above $3,000. With $196.74M liquidated during the last day, ETH has emerged as the liquidation leader. With more than $149 million of the liquidations focused on its marketplaces, Binance was in the lead. In contrast, daily liquidations for Bitcoin only totaled about $45 million.
What’s Next for Ethereum After Shorts Are Wiped Out?
Since there are essentially no large short positions left to liquidate, ETH may now turn around. The recent short squeeze was caused by a large buildup of short positions at the end of June, which preceded the current price movement. The state of ETH is still unclear and contingent on trader sentiment, though.
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