Following the price of ETH, the second-largest cryptocurrency by market capitalization, to a record high of over $3,500, the number of liquidations of short positions reached a record high.
As a result, there has been a record-high number of short liquidations across all derivative exchanges. CryptoQuant stated that short liquidations topped out at almost $55 million. This also saw the ETH market capitalization rise to nearly $400 billion.
Ethereum’s latest rise comes on the back of growing institutional acceptance from investors and commentators. Last week JP Morgan, along with other major banks, advised investors to be bullish on Ethereum and stated that it predicts ETH would outperform Bitcoin.
“We’re maintaining our overweight Ethereum vs. Bitcoin recommendation from April 2020 and reiterating our ~$10.5k price target from January this year.”
The reason for Ethereum’s growing popularity is down to its pioneering in the smart contract market. Many DeFi networks are based on the Ethereum ecosystem and these networks manage the majority of cryptocurrency transactions on a daily basis. This is entirely different from how Bitcoin uses the blockchain.
Whereas bitcoin is primarily used to support payments and as a store of value, Ethereum essentially works as a software platform that enables smart contracts on assets or applications without any third parties interfering. As a result of this, the number of DeFi applications built on Ethereum has risen significantly. Also, last week, the number of active Ethereum addresses hit an all-time high.