cryptopolitan.com
Ethereum ($ETH) is finally having its breakout day, as $BTC dominance stalled. $ETH recovered the $3,300 level, setting expectations for an even more significant run.
Ethereum ($ETH) broke out to $3,359.11, reaching a three-month peak and recovering some of its losses from the slump in March and April. $ETH is closely watched for its ability to break out even higher after months of weakness against $BTC.
$ETH also gained to 0.029 $BTC, as the leading coin is consolidating at $118,000. The recent $ETH recovery also sparked hopes for a full altcoin market, or at least a spillover to the Ethereum ecosystem.
The recent $ETH breakout after months of relative weakness sets expectations that the token may repeat historical bull rallies, stopping at a much higher range.
Ethereum open interest rises to three-year peak
The recent $ETH rally is driven by derivative trading. Open interest on crypto exchanges expanded to a three-year peak above $22B.
For $ETH, the breakout in open interest suggests the asset is finally seen as more lively, after months of low trading activity and open interest under $10B.
The current open interest holds around 65% in long positions, as traders are cautious about drawdowns. $ETH has now broken way above the liquidation levels on DeFi protocols. The first significant liquidation thresholds start as low as $1,600, making most lending protocols highly secure.
The recent spike in open interest may also increase liquidations for $ETH traders. Long positions may be at a higher risk, as there are almost no short positions left to attack. Based on the recent accrued liquidity, $ETH may take a dip to $3,200 to liquidate over $59M in long positions.
During the rally above $3,000, $ETH mostly erased short positions. For the past 24 hours, $ETH became the liquidation leader, with $196.74M liquidated. Binance was the leader, with over $149M of the liquidations concentrated on its markets. In comparison, $BTC only saw around $45M in daily liquidations.
At this point, $ETH may reverse its direction as there are almost no significant short positions left to liquidate. The current price move started with a significant accumulation of short positions at the end of June, leading to the current short squeeze. However, the conditions for $ETH remain uncertain and dependent on trader sentiment.
Spot demand for $ETH may recover
$ETH is not seen as a truly scarce resource, but whales, institutions and companies are showing signs of accumulation for the long term. Holding $ETH is also possible while also tapping the asset’s value through staking or liquid staking.
One of the sources of demand for $ETH is the growing list of treasury companies. Following the model for $BTC, multiple entities are building treasuries. The leader as of July 17 is SharpLink gaming, with its aggressive buying schedule. Following the recent $ETH rally, SBET shares rose to $38.37, potentially setting the stage for more future purchases.
BitDigital (BTBT), which switched from a $BTC to an $ETH treasury, also benefitted from the $ETH rally. BTBT shares rose to $3.93, their highest level for 2025.
The recovery of $ETH to a higher range is raising the shares of other treasury companies. An ongoing rally can further accelerate the trend, putting more $ETH into the hands of big holders. $ETH remains accessible for retailers, but is turning into a play for whales aiming to tap passive income.