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ETH (ETH) breaks $4,000 as ‘shorts’ lose $77 million

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ETH broke the $4,000 level this morning ahead of the upcoming ETH Improvement Proposal (EIP)-1559 in July, data from multiple sources shows.

The world’s second-largest asset by market cap ($470 billion) and is arguably the most-used blockchain (it settles billions of dollars in transactions each day). ETH’s circulating supply is 115 million and it trades at $4,130 at press time.

ETH (ETH) breaks $4,000 as ‘shorts’ lose $77 million
ETH/USD via TradingView.

The price surge saw over $77 million worth of ‘shorts’ get liquidated, data on markets tool Bybt shows. ‘Liquidations,’ for the uninitiated, occur when leveraged positions are automatically closed out by exchanges/brokerages as a “safety mechanism.” 

Futures and margin traders—who borrow capital from exchanges (usually in multiples) to place bigger bets—put up a small collateral amount before placing a trade. If the market moves against them, the collateral is fortified and the position said to be ‘liquidated.’

And those betting against ETH took the brunt of liquidations yesterday. Of the $77 million in capital liquidated, Bitmex traders lost $26 million while Binance traders lost over $11 million.

The single largest liquidation was a Bitmex ETH trade to the tune of $25 million.

ETH burning catalyst

The EIP-1559 is a favorable catalyst driving ETH prices skyward. The proposal battles the network’s high gas fee issue and emission rate by introducing a ‘burning’ mechanism to all network transactions—meaning everything someone pays gas on ETH, the network automatically burns that amount.

The above leads to a perpetually decreasing ETH supply and is even termed “ETH’s scarcity engine” in some circles. This, in turn, is a favorable upcoming event for traders and investors are, as a decreasing supply would mean higher prices as demand for ETH increases/remains the same in the future.

Crypto research companies like Delphi Digital had identified this value growth back in August 2020. “Tying things together, EIP 1559 and staking [create a] symbiotic relationship where not only does increase usage drive value,” the firm said in a report then

It added, “But the introduction of cash flows to a wider group of participants for securing the network creates a more effective long term value proposition [for ETH].”

The post ETH (ETH) breaks $4,000 as ‘shorts’ lose $77 million appeared first on CryptoSlate.


All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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