ETH Short Liquidations Surge as Price Soars Above $3000
ETH’s Price Appreciation Triggers Increased Short Liquidations
Ethereum’s (ETH) price rose by more than 5% on May 3rd, resulting in a spike in the number of liquidated short positions, as reported by Coinglass, a leading on-chain data provider. The rally caused short liquidations on ETH’s derivatives market to reach a two-month high, surpassing the long liquidations.
Liquidations occur in an asset’s derivatives market when a trader’s position is forcefully closed due to insufficient funds to maintain it. Short liquidations, specifically, happen when the value of an asset suddenly rises, compelling traders who anticipate a price decline to exit their positions.
Santiment’s data reveals that on May 3rd, ETH closed above $3000, marking a significant milestone after trading below that price level earlier in the month.
Derivatives Market Activity and ETH’s Current Price
As of writing, Ethereum’s price continues to climb, experiencing a gain of over 5% in the last 24 hours. The altcoin is currently valued at $3,104.
Despite the price rally, the derivatives market for ETH has not witnessed substantial activity. Coinglass data indicates that trading volume in the derivatives market only grew by a mere 2%.
Futures Open Interest and Options Volume
ETH’s futures open interest recorded a minor 3% increase during the same period and now stands at $10.68 billion. Conversely, ETH’s options volume decreased by over 50%.
Options trading grants participants the right to buy or sell an asset at a specified date. A decline in ETH’s options volume suggests decreased speculation regarding its future price movements, as market participants adopt a “wait and see” approach.
The combined reading of a minor hike in ETH’s futures trading volume and a decline in options volume indicates cautious behavior among derivatives market participants. They are refraining from making substantial bets on the cryptocurrency’s future price trends.
For more information about Ethereum’s price prediction, click here.
