The price of Ethereum (ETH) has risen to new heights above $4,000 as the market continues to grow more bullish on the asset. Data from an analysis from TheTie shows that $77 million in shorts were liquidated on Bitfinex today. The analysis reveals that $77 million worth of ETH was bought on the exchange today, and a further $18 million of ETH was purchased on other exchanges as well. The buying pushed the price of Ethereum to $394, a 5% increase in value in 24 hours.
The price of Ethereum (ETH) broke the $4,000 mark again on Wednesday, as the crypto’s price continues to recover from the market crash that took place at the end of 2017.
Ethereum broke through the $4,000 mark this morning ahead of the upcoming Ethereum Improvement Proposal (EIP)-1559 in July, according to multiple sources.
The second largest asset in the world in terms of market capitalization ($470 billion) and arguably the most widely used blockchain (billions of dollars of transactions are made with it daily). ETH’s outstanding offering amounts to 115 million and is trading at $4,130 at the time of publication.
ETH/USD via TradingView.
Data from the Bybt market instrument shows that over $77 million worth of short selling was liquidated as a result of the price increase. Liquidation, for the uninitiated, occurs when leveraged positions are automatically closed by exchanges/brokers as a safety mechanism.
Futures and margin traders, who borrow capital from the exchanges (usually in varying amounts) to make large bets, post a small amount of collateral before making a trade. If the market moves against it, the stock strengthens and the position is considered liquidated.
And those betting on Ethereum were hit hardest by the liquidations yesterday. Of the $77 million in liquidated capital, Bitmex traders lost $26 million and Binance traders more than $11 million.
The most significant liquidation was Bitmex’s $25 million ETH transaction.
Ethereum Burning Catalyst
EIP-1559 is a cheap catalyst that drives up the price of ETH. The proposal aims to combat high gasoline costs and network emissions by introducing a burn mechanism into all network transactions, meaning that when someone pays for gasoline in Ethereum, the network automatically burns that amount.
All of this is leading to a steady decline in ETH stock and is even seen in some circles as the driving force behind Ethereum’s shortfall. This is a beneficial development for traders and investors, as less supply will lead to higher prices if demand for Ethereum increases or stays the same in the future.
Crypto-currency research firms like Delphi Digital have identified this value peak as early as August 2020. The relationship between EIP 1559 and stacking [creates] a symbiotic relationship in which not only increased utilization leads to increased value, the company said in the report.
He added: But introducing money flows to a broader group of participants to secure the network creates a better long-term value proposition [for ETH].
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