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Ethereum’s Supply Surge Raises Concerns Over Ultrasound Money Status Amid Upcoming Pectra Upgrade

Ethereum’s token supply has surged to levels not seen since early 2023, reigniting debates around its inflationary status post-upgrade. Recent analysis indicates that the Dencun upgrade has altered the dynamics BitcoinSistemi

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Ethereum Market Faces High Liquidations but Retains Strong Futures Interest

Traders in Ethereum experienced a turbulent market as a wave of long liquidations swept through, causing some dramatic shifts in futures open interest. Liquidated long positions totaled around $76.4 million, with $55.8 million of that coming out in just one hour. This was the second-largest single-hour liquidation event we’ve seen in the past year, right after a December 9 liquidation that saw around $56 million in long positions taken out. The futures market itself seems just fine; around the time of the liquidation event, open interest still looked quite healthy and was well above the kind of trendline you would expect to see over the course of a year without any major event taking place. And spot Ethereum ETFs? They’re still seeing nice inflows. Yesterday, $76.4M in $ETH long liquidations hit the market, with $55.8M wiped out in a single hour – the second-largest spike in a year, just behind Dec 9’s $56M: https://t.co/6Gj0BlXWMf pic.twitter.com/N0XBrU752T — glassnode (@glassnode) February 4, 2025 Massive Liquidations Shake Ethereum’s Futures Market The crypto market experienced an intense wave of liquidations, but Ethereum’s market saw the most significant knock-on effects. The liquidation of $76.4 million in long positions took place as price fluctuations hit leveraged traders hard. These traders were forced to close over-leveraged positions due to the almost hourly changes in direction that Ethereum’s price was taking. But within this larger context, one hour stood out: over $55 million in Ethereum long positions got liquidated in just this one hour, making this the second biggest hourly liquidation event in the past year. When using leverage, traders are required to maintain minimum margin amounts. If they don’t, their positions are closed—liquidated—from the least favorable side. And when several positions get liquidated at once, we have a cascade. A cascade is a not-an-assault-on-the-resort-kind-of-thing liquid event in which leverage detonates in a falling market, hitting the market harder in the downward direction. Ethereum Futures Open Interest Drops but Stays Above Trendline The futures market for Ethereum was affected directly by the mass liquidation, seeing a sharp downturn in open interest (OI). At the beginning of February, OI for Ethereum futures was at a healthy $20.5 billion. But the liquidations impacted OI heavily. We’re now sitting at $15.9 billion, which translates into roughly a $4.6 billion drop. This is certainly telling us something, and what it is saying is that a lot of speculative positioning has come off the table. Ethereum futures open interest has decreased, but the amount that remains suggests traders are still taking positions in the market. OI has dropped about 15% in the last month, but it stands at about $16.2 billion, which is well above where we would expect the OI to be given the number of pending trades on the Ethereum network. The next section will explore the implications of these OI levels on future market activity for Ethereum prices. Ethereum Spot ETF Sees Positive Net Inflows During the windfalls and adjustments to the futures market, the Ethereum spot ETF was hit by only a slight increase in its total net outflows of $16.88 million for the week, and on February 3 even saw some net inflows of $83.54 million. If you’re keeping score, none of this is actually good for the ETFs themselves, since they’re not supposed to be losing or gaining that much in value en route to an apparent goal of simply tracking the price of Ethereum. The crypto market has seen a significant new development in the form of Ethereum spot ETFs. These exchange-traded funds give traditional investors a chance to invest in Ether, the asset that powers the Ethereum network, in a regulated manner. And even if they haven’t yet been launched, the actual proposals are seen as a positive sign for the overall crypto market. On February 3, the total net outflow of Bitcoin spot ETFs was US$235 million, the first net outflow after the net inflow in the past 4 days. Fidelity ETF FBTC had a net outflow of US$177 million. Ethereum spot ETF had a total net inflow of $83.5404 million.… — Wu Blockchain (@WuBlockchain) February 4, 2025 What’s Next for Ethereum? The most recent market activity for Ethereum showcases the clash between speculation driven by leverage and true investment. The sharpness of the recent liquidation event can’t be overstated—it wiped out billions in futures positioning. Yet, despite this write-down, Ethereum’s open interest suggests that speculative interest remains. Should it continue building without true investment backing, the next liquidation event could be even sharper and hit even harder. Concurrently, the affirmative inflows into Ethereum spot ETFs signal that institutional investors are undaunted by ephemeral price movements. This trend appears to be one that could provide long-term stability to Ethereum’s price, buffering the effects of trading activity that is simply too highly leveraged. In the future, traders need to watch Ethereum’s OI levels closely because a further drop could imply a decrease in speculation—and, as a result, a more stable market. Reduced speculative use of Ethereum would mean its price is more tied to genuine demand and less to the forces unleashed when big traders bet either for or against it. Despite being a work in progress, the confidence that so many have in Ethereum seems to be intact. And that is valuable in and of itself, because the Ethereum Foundation and the many developers who have committed to the Ethereum ecosystem clearly need a certain modicum of confidence to keep carrying on with projects that have the potential to significantly rewire parts of our economy. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news ! Image Source: nexusplexus/ 123RF // Image Effects by Colorcinch BitcoinSistemi