Ethereum is once again making headlines, and this time, it’s not solely due to its price movements. Firms holding ETH treasuries are amassing at unprecedented rates, while the token remains stable. However, there’s an interesting development: leverage in the market is increasing. Ethereum treasury companies are acquiring Ethereum at an extraordinary rate, with total ETH holdings now nearing a valuation of almost $18 billion.
The chart showed a notable rise since mid-July, aligning with ETH’s climb toward $4,800 before stabilizing around $4,100. Corporate confidence stayed strong despite market leverage and volatility. As treasuries keep gathering ETH, the derivatives data seems to indicate some signs of weakness. In a significant change, the Estimated Leverage Ratio jumped from 0.50 to nearly 0.54 in just three days, reaching one of the highest levels seen this month. The price of ETH has settled near $4.1K, leading traders to prefer leveraged positions instead of accumulating spot assets. Historically, spikes near these levels have preceded high volatility, whether it be a breakout fueled by sustained buying or a liquidation-driven drop below a certain threshold.
As leverage approaches its peak, the next catalyst for the market could dictate whether ETH sees a rise or encounters a downturn. The recent increase in leverage has exposed weaknesses in the market. Recently, nearly $3 billion was lost in liquidations, with ETH alone representing about $900 million—signifying its largest single-day decline since 2021. Smaller altcoins, particularly those ranked between the top 10 and top 700 by market cap, faced the brunt of forced sell-offs, suggesting that highly leveraged positions remain risky. Despite this, ETH has yet to experience a full reduction in leverage. Market conditions might lead to another wave of liquidations if downward pressure increases.