Ether Volatility Expected as Traders Flood Exchanges With $231M of ETH Amid ETF Hopes

The surge in deposits comes after a 22% rally in ether spurred by hopes of a spot ETF approval.

A record amount of ether (ETH) moved into cryptocurrency exchanges last week as traders ramped up bets on an approval for a spot ether exchange-traded fund (ETF).

According to data from on-chain analytics firm CryptoQuant, a net total of 62,000 ETH, valued at around $231 million at the time of writing, moved into exchanges on Monday. This marks the highest daily net exchange inflow since March last year, and is a key metric for gauging trader sentiment and upcoming price volatility, the report stated.

The large exchange inflows come amid a 22% price rally for ether over two days last week. The price uptick began after a Bloomberg report cited an unnamed source close to the matter as saying that the odds of an approval for a spot ether ETF have increased to 75%.

Multiple reports throughout the year have highlighted that applications for ether ETFs, filed with the U.S. Securities and Exchange Commission (SEC) by asset managers including Grayscale, ProShares and VanEck, have seen progress in their filing process.

These reports have spurred hopes among traders that an approval for an ether ETF could be imminent, especially after the approval of bitcoin (BTC) spot ETFs in the U.S. last year led to a strong rally in the flagship cryptocurrency.

Traders responded to the ether ETF hopes by opening the largest daily amount of spot ether long positions on perpetual exchanges and buying the most spot ether so far in 2024, according to CryptoQuant. These trades pushed ether prices to a four-month high of $1,730 on the morning of Feb. 27, before the token encountered resistance at the key level.

The buying pressure also led to a short squeeze, with 9,300 ETH being liquidated on the short side over a 48-hour period, the report stated.

CryptoQuant noted that a record high of $11.7 billion in open interest remains in the ether futures market, and that if an ether ETF application is delayed or denied, this could lead to a large price reaction.