Ethereum Gains 50% in July, Nears $4K Breakout

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Key Takeaways:

• ETH up 50% in July, marking its strongest monthly gain since 2022.
  
• Open Interest hits a record $60B, signaling aggressive Futures positioning.
  
• On-chain metrics support bullish momentum, with accumulation outweighing profit-taking.

Ethereum [ETH] has wrapped up a red-hot July with a staggering 50% gain—the token’s largest monthly move since 2022. But this rally is not just price-driven. Ethereum’s Open Interest (OI) has skyrocketed to an all-time high, surpassing $60 billion, signaling a surge in leveraged trading activity.

At press time, ETH was just 3.4% shy of the critical $4,000 mark. As traders aggressively position for what may be the next leg up, market watchers are asking: Is this strategic conviction or unchecked euphoria?

Ethereum Futures Surge While Spot Market Tightens

Ethereum kicked off Q3 with a bang, pushing past key resistance levels to log its biggest monthly candle in over two years. The on-chain narrative adds further intrigue: Over 98% of ETH’s circulating supply is now in profit—breaching a level that historically precedes distribution phases.

Despite this, no major profit-taking has materialized. Realized profits recently peaked at $1.25 billion, around the 2021 election-cycle high of $4,007. Yet, ETH’s price remains steady, a signal that strong buy-side pressure is absorbing any selloffs.

Meanwhile, exchange reserves have declined from 20 million ETH to 19 million throughout July—evidence of accumulation rather than distribution. This outflow, combined with record-breaking Open Interest, points toward calculated positioning ahead of a potential breakout.

$4K Resistance Builds Short-Side Liquidity

With ETH now hovering near $3,900, traders are eyeing the $4,000 level as a potential breakout trigger. However, the Relative Strength Index (RSI) recently surged above 85—typically a signal of short-term overheating. ETH even saw a modest 0.87% intraday pullback, inviting opportunistic shorts to enter the fray.

Data from Coinglass shows significant short-side liquidity building just below $3,980, including a $115 million liquidation cluster. If bullish momentum persists, this liquidity could become fuel for a classic short squeeze, potentially driving ETH decisively past the $4K mark.

Strategic Leverage or Speculative Frenzy?

The explosive rise in Futures Open Interest, coupled with declining exchange balances and resilient price action, suggests a bullish structure backed by fundamentals. Rather than speculative froth, the current setup reflects strategic leverage deployment.

If this structure holds, consolidation just below $4K could trap short positions, setting the stage for a high-velocity breakout. ETH’s current behavior may be less about irrational exuberance—and more about traders front-running what they believe is an inevitable move higher.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses

Also Read: Ethereum Surges Above $3,860 Amid Strong ETF Inflows