As Ethereum [ETH] advanced toward $2500, traders went all-in, adding massive amounts of leverage on both Binance and Bybit.
The combined Open Interest (OI) on these two exchanges grew by $1.12 billion over the seven days ending on the 22nd of August, after traders began to chase Ethereum’s breakout.
Recently, that momentum has dramatically fallen off. As of the 30th of August, the leverage collapsed 90.9% to just $102 million. Binance fell from $843 million to $94 million, while Bybit plunged from $277 million to $8 million.
However, ETH is still trading near $2500, even though derivatives are being added by much smaller margins. In other words, this means that the rally is now relying less on rapid expansion of derivatives in order to continue supporting the price.
Ultimately, if Ethereum holds $2500 while leverage decreases, then this would likely indicate a rally based on growing demand.
With leveraged trading cooling, Ethereum’s support is increasingly coming from spot ETFs.
The volume of ETH being bought by institutions through spot ETFs has grown with each session since the 15th of August. Since then, U.S.-based Ethereum ETFs have had approximately $1.5 billion in investment over 10 days.
Over this same period BlackRock’s ETHA accounted for 71.9%, or approximately $1.02 billion, of total investment in all U.S.-based Ethereum ETFs. At an ETH price level of $2,400-$2,500, these investments would represent approximately 570,000-630,000 ETH worth of net purchases.
More importantly, ETF inflows matter because they create direct demand for ETH in the spot market without adding leverage through futures. All in all, it is likely that continued ETF inflows will support ETH’s stabilization even if derivative positions continue to be reduced.
Whale selling tests ETH demand
That institutional demand now faces a direct supply test, as whale 0x2Ea2 has moved substantial ETH onto major exchanges. Over two days, the wallet deposited 40,881 ETH worth $100.67 million, spreading transfers across Binance, OKX, Bybit, Kraken, and Gate.
Several deposits reached thousands of ETH, including 8,629 ETH sent to Binance within one day. This does not necessarily mean that whale 0x2Ea2 sold this amount of ETH.
However, placing ETH directly on an exchange makes it immediately available to be traded. This is important since continued sales of ETH could potentially absorb some of the spot demand for ETH currently at around $2,500.
Meanwhile, the whale still possesses 10,506 ETH worth roughly $25.52 million, and thus there are additional potential supplies. If that balance follows, ETF demand must absorb heavier selling to maintain price stability.
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