In brief
The price $ETH rose above $4000 thanks to active buying and a weekly increase of 18%. Over the past 24 hours, this led to short liquidations totaling $184 million.
The rise in open interest for futures and a significant inflow of institutional investments indicate growing market confidence and renewed faith from major investors.
ETH holds key support around $3909 and has the potential to test resistance at $4430; a sustained breakout could propel it to an all-time high ($4827).
The rise of Ethereum above the $4000 mark triggered a significant wave of short liquidations, reflecting growing demand for the leading altcoin.
On-chain data shows a growing interest and accumulation, suggesting that short sellers may face further losses if Ethereum's price momentum continues.
ETH rose above $4000 amid a resurgence of buying momentum
The sharp increase in demand for ETH has led to an 18% rise in its price over the past week. This strong buying momentum and improved market sentiment resulted in yesterday's price increase above the $4000 mark, triggering short liquidations.
According to Coinglass, the volume of short liquidations over the last 24 hours amounted to $184 million, while the volume of long liquidations remains relatively modest at about $24 million.
This highlights the intensity of the short squeeze as traders rush to close their positions amid the rally.
Cryptocurrency liquidation heatmap.
However, on-chain data suggests that this group of investors may face even greater losses, and ETH is likely to continue rising.
For example, open interest in ETH futures increased alongside its price, indicating high market activity. At the time of publication, it stood at $51.61 billion, up 10% over the last 24 hours.
Open interest in ETH. Source: Coinglass
Open interest in the asset measures the total number of outstanding futures or options contracts in the market. When the price of the asset and its open interest rise simultaneously, it signals strong trader confidence in the continuation of the current trend.
For ETH, this indicates that more investors are actively taking new positions and are confident in the ongoing price momentum.
Moreover, the revival of interest from institutional investors bolsters this optimistic outlook. According to SosoValue, there has been a resurgence of inflows into ETH-backed exchange-traded funds (ETFs) this week amid improving market sentiment.
The period from August 4 to 8 saw an inflow of funds into these funds totaling $326.83 million.
Total net inflow of funds into spot Ethereum ETFs. Source: SosoValue
The new wave of institutional capital indicates a restoration of trust from major investors, providing an important support level that could sustain ETH's upward trajectory in the near term.
$ETH holds support at $3909 — the next target is $4430 and above
At the time of publication, ETH is trading at $4188, maintaining a recently established support level around $3909. If this support strengthens and buying momentum increases, the price of ETH could rise to $4430, potentially testing and breaking through this resistance.
A successful breakout could prepare ETH for a return to its all-time high of $4827.
On the other hand, if buying pressure weakens, $ETH may lose momentum and reverse the current upward trend. Failure to maintain support at $3909 could lead to a price drop to $3340.