Ethereum (ETH) Back Above $3.5K: Key Growth Factors
Key Takeaways
- Short liquidations helped fuel the Ethereum rally beyond $2.7k.
- $5 billion in reserves among the top 10 ETH holders was a primary factor driving the rally.
- Growing demand is expected, potentially spurring Ethereum to new all-time highs.
Ethereum [ETH] has not only reclaimed the $3,000 level this week but has also flipped it to support.
Since July 14th, ETH has rallied by 16%, trading just above $3.5k at the time of writing. This move was driven by strong spot ETF inflows and increased on-chain activity.
The exchange reserve was also falling, a classic sign of accumulation. Holders typically move their assets out of centralized exchanges for long-term storage, with outflows visible on-chain.
Surging Open Interest indicates intense speculative activity.
The combination of dwindling exchange reserves and rising Open Interest drove the Estimated Leverage Ratio to cycle highs.
While appearing high and headed for a retracement, healthy spot demand balances the risk.
The Role of the Derivatives Market
Evidence shows that short liquidations were fueling Ethereum’s rise. Analyst Darkfost noted that short liquidations were dominating on Binance.
Unlike earlier months when long liquidations were higher, recent short liquidations suggest some market participants were positioned against the trend.
These liquidations inadvertently helped fuel the rally.
Looking at the value of short liquidations in USD, there were multiple short squeezes since May, with over $20 million liquidated in a day.
The size of these short liquidations could fuel the rally, alongside the growing belief in Ethereum as a store of value.
The top 10 companies collectively hold 1.6 million ETH, worth $5 billion. SharpLink [SBET] leads with 280.6k ETH in its reserves.
More companies are expected to add to their Ethereum reserves, creating billions of dollars worth of demand.