This article was first published on The Bit Journal.
Ethereum Price recently pushed back above $1,800 this week, outperforming Bitcoin. Traders are now left wondering if ETH is really starting to recover this time, or just setting up a new way to crash and burn for traders.
ETH jumped by more than 4% on June 15, its biggest gain in nearly two weeks. This coincided with a major surge in derivatives activity and a continued flow of new money into the market from institutions.
However, some analysts are still being cautious, pointing out that when markets get carried away by short term momentum, it can all come crashing down quickly. At press time, ETH trades at $1,784.70.
Ethereum Open Interest Jumps as Traders Rush Back In
The market is getting quite active again due to the derivatives market.
According to CryptoQuant, Ethereum open interest climbed by 7.7%, the biggest single day jump seen in a month. When open interest rises at the same time as the Ethereum price, it usually means fresh capital is coming into the market.
Some of that activity seems to have been linked to a well known bearish bet from crypto trader Ansem, who made a large bet that Ethereum would drop all the way to $888. But, instead of tanking, ETH shot up instead.
As the Ethereum price broke above key resistance levels, traders scrambled to change their positions. That rush of buying activity gave the market even more fuel for its rally, and started a lot of speculation that short sellers were getting forced out of their positions.
While short squeezes can be powerful, they don’t always mean a lasting trend change. Will spot buyers continue to step up and buy ETH after the initial spurt of derivatives activity starts to fade out.
Institutional Buyers Keep On Adding Ethereum
This rally is one of the few in a while that is being driven not only by short term traders. Specifically, there is a lot of institutional money pouring in alongside.
Blockchain analytics platform Lookonchain reported that BitMine added 76,881 ETH to its holdings last week, which means its total holdings now stands at 5,620,754 ETH, which is equivalent to about 4.66% of the entire Ethereum supply.
BitMine confirmed that its Ethereum holdings had actually hit 5.62 million ETH, and that its overall portfolio (which includes cash and investments) now stands at $10.4 billion.
BitMine is doubling down on its investment in Ethereum despite market weakness. Its average purchase price is roughly $3,450 per ETH, which means that most of their existing position is in the red. And yet, they keep on buying.
For many investors, that kind of conviction means long term confidence in Ethereum.
Ethereum Outperforms Bitcoin During Risk-On Trading
Ethereum price has also been showing relative strength against Bitcoin.
While Bitcoin has really struggled to build any momentum as concerns grow over Federal Reserve policy and the overall state of the economy, ETH is actually attracting new inflows.
Ethereum gained 3.16% on June 15, outperforming Bitcoin in the latest “risk-on” move. With the price now around $1,800, traders are getting excited about a technical level that many had been watching since ETH’s slide earlier this year.
The fact that Bitcoin normally leads crypto recoveries makes this really noteworthy.
When Ethereum starts to outperform, it usually means that a lot of investors are suddenly getting ready to take on higher risks within digital assets. This has sometimes been a sign that an Altcoin rally is just around the corner.
That is no guarantee that this trend will stick, but it does suggest that investors are looking beyond Bitcoin.
Can the Ethereum Price Rally Actually Stick?
Despite improving sentiment, risks remain.
The strongest case against this rally is that derivatives activity is surging faster than actual buying. If traders are mainly using leverage to boost their bets, rather than just buying ETH, then the price could become very vulnerable to a reversal.
History shows that leverage-heavy rallies can be nothing more than bull traps when the momentum finally gives out.
On the other hand, the fact that institutions are still piling in, Ethereum is now looking stronger against Bitcoin, and growing trader participation all support the bullish case.
If ETH holds above the 61.8% Fibonacci support at $1,754, it could retest resistance at $1,873; a break below risks a drop toward $1,700. Watch for Fed Chair Warsh’s remarks on June 17 for macro direction.
Conclusion
Ethereum has really gained some momentum again now that it’s back above $1,800, thanks to rising open interest and continued buying from big investors. BitMine’s purchase of 76,881 ETH and its stash of 5.62 million ETH is a clear sign that large investors are still very committed, even after the recent market wobble.
Whether this rally turns into a proper recovery is still a mystery, but for now ETH is showing more life than Bitcoin and has got traders and institutions talking again.
Glossary
Ethereum (ETH): The native cryptocurrency that runs on the Ethereum blockchain.
Open Interest: The number of outstanding derivatives contracts out in the market.
Spot Demand: When people just buy the thing itself, rather than trading it through derivatives.
Short Squeeze: When the price spikes up because short sellers get forced to buy back their bets.
Institutional Accumulation: Large-scale purchases made by companies, funds, or professional investors.
Frequently Asked Questions About Ethereum Price
Why is the Ethereum price going up?
Ethereum price is getting a boost from more traders getting involved, rising open interest, and continued buying from big investors.
How much did Ethereum open interest actually increase?
Ethereum open interest jumped by a very respectable 7.7%, the biggest daily increase we’ve seen for a month or so.
How much Ethereum does BitMine own?
BitMine has a holding of 5,620,754 ETH, which works out to about 4.66% of all Ethereum in existence.
Is the current Ethereum rally just a short squeeze?
Part of the move may have been amplified by short covering, but institutional buying and relative strength against Bitcoin suggest additional factors are contributing.
References
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
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