Ethereum Rebounds 31% As Short Liquidations Fuel Rally

TLDR:

• Short liquidations averaged $131.0M weekly, up 1,514% WoW, driving ETH’s 31% price surge.
• Base fees rose 189% and fees burnt jumped 251%, reversing two months of network compression.
• Binance funding turned positive at 0.01, its first sustained bullish tilt in months.
• Average deposit size fell 40% to 16.1 ETH even as total inflow rose 101% week-over-week.

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Ethereum posted a sharp rebound this week, climbing from a multi-week base near $1,870 to $2,517 before easing to $2,460.89.

The rally traces back to forced short covering rather than fresh spot buying. Trading volume over 24 hours reached $15.96 billion, while the token gained 1.88% in a single day and 31.20% across seven days.

 

Liquidations Drive The Move While Fees Return

Short liquidations averaged $131.0 million over the past week. That figure marks a 1,514% jump from the prior week and a 437% rise above the 90-day average. Long liquidations, by contrast, sat 40% below their quarterly norm during the same stretch.

Network activity shifted alongside the price move instead of leading it. Base fees rose 189% week-over-week, and the dollar value of fees burnt climbed 251%. Total network fees increased 138%, breaking a two-month stretch of compressed activity on the chain.

Derivatives markets showed a similar tilt. Binance funding rates now average 0.01, up 25% from last week and 95% above the quarterly baseline. This marks the first sustained positive funding reading in several months, pointing to renewed leverage building on the long side.

Taker buy volume reached $5.49 billion against $5.17 billion in sell-side volume. The gap suggests aggressive buying pressure met the short squeeze, adding momentum once liquidations began cascading through the order book.

Deposit Patterns Point To Smaller, Fragmented Flows

Average deposit size told a different story than the price action. The seven-day mean inflow fell to 16.1 ETH, a drop of 40% versus the 90-day baseline. Even so, total inflow rose 101% week-over-week during the same period.

This combination indicates that ETH arrived on exchanges through many smaller transfers rather than large block deposits. Whale-sized inflows, typically a signal of concentrated selling intent, were notably absent from the recent data.

Netflow figures reinforced the fragmented picture. August 19 recorded a positive netflow of 51.2 thousand ETH, followed by a negative reading of 49.7 thousand ETH on August 20. The swing between the two days points toward venue rebalancing among traders and platforms, not sustained directional pressure in either direction.

The Coinbase Premium, a gauge often used to track US spot demand, sits at -0.02. That reading marks its least negative level in recent weeks, though it stops short of confirming a shift toward organic buying.

Taken together, the current setup shows positioning-led price discovery running ahead of spot participation. Historical patterns for similar configurations have produced two outcomes: continuation once premiums turn positive, or a retreat toward the prior trading range if funding cools before spot demand catches up.

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Source: https://blockonomi.com/ethereum-rebounds-31-as-short-liquidations-fuel-rally/