New York, NY – The price of Ethereum (ETH) experienced a significant increase of over 5% on May 3, leading to a surge in the number of short positions being liquidated. This sharp rise in price resulted in ETH’s derivatives market witnessing the highest level of short liquidations in two months, according to data from Coinglass.
On that day, approximately $35 million worth of ETH’s short positions were liquidated, while long liquidations amounted to just $7.16 million. This imbalance in liquidation figures indicates a strong movement in the market favoring price increases rather than declines.
Liquidations in the derivatives market occur when a trader’s position is forcibly closed due to insufficient funds to maintain it. Short liquidations specifically happen when the value of an asset suddenly rises, compelling traders with open positions in anticipation of a price drop to exit their positions.
Santiment’s data revealed that Ethereum closed above $3000 on May 3 after trading below that level since the start of the month. The altcoin continued to rise in value, with its price increasing by more than 5% in the last 24 hours. At the time of reporting, ETH was valued at $3,104, showcasing its strength in the market.
Despite the price rally, trading activity in ETH’s derivatives market did not witness a significant increase. In fact, Coinglass data suggested that trading volume in the market only grew by 2%, indicating a cautious approach from market participants.
Moreover, while ETH’s Futures open interest saw a minor 3% increase, its Options volume declined by over 50%. This decrease in Options trading suggests that there is less speculation on Ethereum’s future price movements, as traders adopt a more conservative stance in the market.
Overall, the combination of a slight uptick in Futures trading volume and a decline in Options volume indicates that participants in the derivatives market are taking a “wait and see” approach. This strategy reflects a reluctance to make substantial bets on the direction of Ethereum’s price movement, highlighting a sense of uncertainty among traders.