With the increasing possibility of the approval of the Ethereum spot ETF, the total value locked (TVL) in AAVE has reached its highest level since the Terra crash, inflows of ETH into exchanges have reached a new high since March, and the open interest in Ethereum has also exceeded $10 billion. Please be cautious as there may be significant volatility.
Summary:
Bloomberg Analyst: SEC to Approve Ethereum Spot ETF “19b-4 File” on Friday Morning
Background:
Aave’s Challenges in Deployment: From Aave V3’s High Growth to GHO’s Liquidity Strategy
Table of Contents:
AAVE TVL Reaches Two-Year High, Positive Impact from Approval of Ethereum Spot ETF
CryptoQuant: Inflows of ETH into Exchanges Reach New High Since March
Open Interest in ETH Surpasses $10 Billion, Reaching Historic High
The total value locked (TVL) in AAVE, the leading decentralized lending protocol, has now grown to $12.966 billion, reaching its highest level since the Terra crash on May 6, 2022, with a 20% increase in the past 7 days.
Source:
Defi Llama
Regarding the rapid growth of AAVE TVL this week, DL News reports that this is the latest sign of DeFi’s recovery from numerous disasters since the bear market in 2022. It also indicates that after Bloomberg ETF analyst revealed that the U.S. Securities and Exchange Commission (SEC) may approve the Ethereum spot ETF’s 19b-4 file as early as Friday, a large number of cryptocurrency traders have flocked to Ethereum. Since senior ETF analyst Eric Balchunas raised the probability of the Ethereum spot ETF’s approval from 25% to 75%, over $517 million worth of cryptocurrencies have been deposited into AAVE V3. The amount of cryptocurrencies borrowed in AAVE in the past 24 hours has exceeded $6.8 billion, reaching a new high since May 9, 2022.
Users may deposit ETH into AAVE, borrow USDT to buy more ETH, and increase leverage while holding spot positions.
At the time of writing, the price of AAVE is temporarily reported at $95.66, with a 7-day increase of 10.3%. The price of ETH is reported at $3,784, with a 7-day surge of 25.6%.
Further reading:
Don’t Celebrate Too Early! Bloomberg Analyst: SEC to Approve Ethereum Spot ETF “19b-4” as Early as Wednesday, but There Is Still a Key Step Needed for Listing..
AAVE price trend in the past 7 days. Source: CoinGecko
On the other hand, although multiple sources indicate a significant increase in the probability of the approval of the Ethereum spot ETF, it does not mean that we will see the listing of the Ethereum spot ETF soon. Previously, ETFStore President Nate Geraci pointed out in a post on Monday that:
In response, Cryptoslate cited analysis firm CryptQuant, which warned that if the SEC reverses its attitude and rejects the Ethereum spot ETF application or delays the approval process, ETH may stimulate a “major price adjustment.” In addition, the significant increase in inflows of ETH into exchanges may also cause price volatility in the coming days.
According to CryptQuant’s research director Julio Moreno, in the rumors of the potential approval of the Ethereum spot ETF, the net inflow of ETH into exchanges has reached 62,000 ETH, the highest level since March. CryptQuant also stated that traders have opened long positions in the futures market in anticipation of price increases, creating upward pressure on prices, resulting in the open interest in ETH surpassing $10 billion on the 21st, reaching a historic high and leading to a large number of short liquidations.
Source: CryptQuant
Furthermore, long-term ETH holders purchased over 100,000 ETH in a single day on the 21st, the highest daily amount since September 2023, which has become a major force driving the price surge of ETH this week.
Source: CryptQuant
Related Reports
Which Ecosystem Projects Are Worth Watching If the Ethereum ETF Is Approved?
Standard Chartered Bank: SEC to Approve Ethereum Spot ETF this Week, BTC Will Reach a Historic High on the Weekend
What is an Ethereum Spot ETF? Differences from Futures, How to Invest, Pros and Cons, Issuance Method… Complete Analysis
Zhu Su from Three Arrows: If Ethereum Spot ETF Is Approved, ETH Will Reach $5,400, and Bitcoin Will Surge to $80,000