coindesk.com
Exchanges experienced a net inflow of 62,000 $ETH ($231 million) this week, suggesting a period of volatility is coming.
Daily spot buying from $ETH permanent holders hit its highest level in 2024 this week.
A significant price correction is expected if a spot ether ETF is delayed or denied due to high levels of open interest.
Ether ($ETH) is expected to experience a period of volatility this week due to exchange inflows spiking to the highest level since March, according to a report by data provider CryptoQuant.
The daily net flow of $ETH, which tracks inflows and outflows to exchanges, hit 62,000 ether ($231 million) this week. High exchange flows are typically associated with volatility, the report said.
The surge in deposits comes on the back of a significant rally in ether, with prices rising by 22% in two days after Bloomberg analyst James Seyffart said that the odds of spot ether exchange traded-fund (ETF) approval have increased to 75% and multiple reports that filing process with the U.S. Securities and Exchange Commission (SEC), for the ETFs, are suddenly seeing progress.
Traders responded by aggressively opening $ETH long positions on perpetual exchanges and buying spot, resulting in the largest daily spot buying from $ETH permanent holders so far in 2024. These trades were placed in the hopes that $ETH price will see a similar uptick that bitcoin (BTC) has seen since the news of the approval of U.S. spot ETFs started to make the rounds last year.
The increase in demand for $ETH led to a short squeeze, with 9,300 $ETH being liquidated on the short side over a 48-hour period.
CryptoQuant warns that if an ether ETF application is delayed or denied, a significant price reaction could occur due to high open interest, which currently stands at a record high of $11.7 billion.
Read more: Ether ETF Hopes Drive Futures Open Interest to Record $14B