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Ethereum’s $35 million shake-up: How ETH’s 7% hike triggered a 2-month high

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ETH’s derivatives market noted a decline in activity as traders adopted a different strategy.

Ethereum

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  • ETH’s price appreciated by over 5% on 3 May
  • This contributed to a hike in the number of short positions liquidated

Ethereum’s [ETH] 7% price rally during the intraday trading session on 3 May caused short liquidations on its derivatives market to rally to a two-month high, according to Coinglass

In fact, the on-chain data provider went on to reveal that on that day, $35 million worth of ETH’s short positions were liquidated. In comparison, long liquidations totalled just $7.16 million. 

ETH Liquidations

Source: Coinglass

Liquidations happen in an asset’s derivatives market when a trader’s position is forcefully closed due to insufficient funds to maintain it. Short liquidations occur when the value of an asset suddenly rises, and traders who have open positions in favor of a price decline are forced to exit their positions. 

According to Santiment’s data, the altcoin closed on 3 May above $3000 after trading below that price level since the beginning of the month.

Derivatives market traders stay their hands

Still extending its gains at press time, ETH’s price was up by over 5% in the last 24 hours. At the time of writing, the market-leading altcoin was valued at $3,104. 

Here, it’s worth noting that Coinglass data also suggested that the price rally has not instigated any significant activity in ETH’s derivatives market. In fact, trading volume in that market grew by just 2%.


Read Ethereum’s [ETH] Price Prediction 2024-25


Similarly, the coin’s Futures open interest recorded a minor 3% hike over the same period. ETH’s Futures open interest was $10.68 billion at press time. Furthermore, ETH’s Options volume cratered by over 50% during the period under review.

Options trading grants participants the right to buy or sell an asset at a specified date. Generally, when ETH sees a decline in its Options volume, it means that there is less speculation on its future price movements as market participants wait to see where the coin’s market might be heading next. 

A combined reading of the minor hike in ETH’s Futures trading volume and its declining Options volume suggests that the coin’s derivatives market participants have adopted a “wait and see” approach. Simply put, they are not placing significant bets on where its price might head next. 

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Abiodun is a full-time journalist working with AMBCrypto. He is also a lawyer with over 2 years of experience. With a keen interest in blockchain technology and its limitless possibilities, Abiodun spends his time understanding the technology, building projects, and educating people about it.
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