Why is ETH breaking out: token gets a boost from peak open interest and treasury companies

Ethereum (ETH) is finally having its breakout day, as BTC dominance stalled. ETH recovered the $3,300 level, setting expectations for an even more significant run. 

Ethereum (ETH) broke out to $3,359.11, reaching a three-month peak and recovering some of its losses from the slump in March and April. ETH is closely watched for its ability to break out even higher after months of weakness against BTC. 

ETH also gained to 0.029 BTC, as the leading coin is consolidating at $118,000. The recent ETH recovery also sparked hopes for a full altcoin market, or at least a spillover to the Ethereum ecosystem. 

The recent ETH breakout after months of relative weakness sets expectations that the token may repeat historical bull rallies, stopping at a much higher range. 

Ethereum open interest rises to three-year peak

The recent ETH rally is driven by derivative trading. Open interest on crypto exchanges expanded to a three-year peak above $22B. 

For ETH, the breakout in open interest suggests the asset is finally seen as more lively, after months of low trading activity and open interest under $10B. 

The current open interest holds around 65% in long positions, as traders are cautious about drawdowns. ETH has now broken way above the liquidation levels on DeFi protocols. The first significant liquidation thresholds start as low as $1,600, making most lending protocols highly secure. 

The recent spike in open interest may also increase liquidations for ETH traders. Long positions may be at a higher risk, as there are almost no short positions left to attack. Based on the recent accrued liquidity, ETH may take a dip to $3,200 to liquidate over $59M in long positions. 

During the rally above $3,000, ETH mostly erased short positions. For the past 24 hours, ETH became the liquidation leader, with $196.74M liquidated. Binance was the leader, with over $149M of the liquidations concentrated on its markets. In comparison, BTC only saw around $45M in daily liquidations. 

At this point, ETH may reverse its direction as there are almost no significant short positions left to liquidate. The current price move started with a significant accumulation of short positions at the end of June, leading to the current short squeeze. However, the conditions for ETH remain uncertain and dependent on trader sentiment. 

Spot demand for ETH may recover

ETH is not seen as a truly scarce resource, but whales, institutions and companies are showing signs of accumulation for the long term. Holding ETH is also possible while also tapping the asset’s value through staking or liquid staking. 

One of the sources of demand for ETH is the growing list of treasury companies. Following the model for BTC, multiple entities are building treasuries. The leader as of July 17 is SharpLink gaming, with its aggressive buying schedule. Following the recent ETH rally, SBET shares rose to $38.37, potentially setting the stage for more future purchases. 

BitDigital (BTBT), which switched from a BTC to an ETH treasury, also benefitted from the ETH rally. BTBT shares rose to $3.93, their highest level for 2025.

The recovery of ETH to a higher range is raising the shares of other treasury companies. An ongoing rally can further accelerate the trend, putting more ETH into the hands of big holders. ETH remains accessible for retailers, but is turning into a play for whales aiming to tap passive income.