Leveraged Bets On Ethereum Soar: What This Means For Traders and Investors
21 November 2024 - 6:30PM
NEWSBTC
The Ethereum (ETH) market may now be heading for a significant
shift in momentum as its derivatives market continues to exhibit
unprecedented growth. Particularly, while Bitcoin’s price action
remains a dominant force in the market, Ethereum’s derivatives
activity suggests that it could be gearing up for notable upward
momentum. Related Reading: Is Ethereum Undervalued? Investors Hold
Firm While Price Targets Rise New Highs In ETH Open Interest And
Leverage Ratios According to a recent analysis by CryptoQuant’s
EgyHash, the open interest in Ethereum has surpassed its previous
all-time high, marking a 40% increase in just four months and
exceeding the $13 billion threshold. The surge in open interest,
which represents the total number of outstanding derivative
contracts, reflects a growing engagement among traders and
institutions in Ethereum’s market. Alongside this, EgyHash also
mentioned that funding rates have turned moderately positive,
signalling that long-position traders are currently dominant. This
aligns with a sentiment favouring further price increases for ETH
in the short term. The rise in open interest is not the only
indicator of Ethereum’s increasing activity in derivatives markets.
The CryptoQuant analyst pointed to Ethereum’s estimated leverage
ratio. EgyHash disclosed that this metric which is calculated as
the ratio of open interest to the exchange’s coin reserves, has
also reached a new all-time high of +0.40. Commenting on what these
rising metrics means for market participants, the CryptoQuant
analyst wrote: While these trends underscore positive market
sentiment toward ETH, it would be prudent to remain mindful of
potential risks. The elevated leverage and dominance of long
positions could increase the likelihood of a long squeeze if sudden
price volatility occurs, potentially leading to market corrections.
Ethereum Market Performance Regardless of the positive key metrics,
Ethereum has continued to be one of the underperforming crypto in
the market especially when compared to Bitcoin. Particularly, while
Bitcoin has consistently being breaching major resistance to hit
new highs, ETH still remains 36.2% decrease away from its all-time
high of $4,878 registered in 2021. However, as of today, the asset
seems to be gearing up for an uptrend. At the time of writing,
Ethereum has surged by 0.9% in the past day with a current trading
price of $3,112. Renowned analyst known as Ali on X has recently
shared his outlook on the asset noting that Ethereum could
outperform Bitcoin soon. The analyst backed this statement citing
several key metrics and trends. Related Reading: Ethereum Price
Faces Challenges: Will It Find Traction Soon? According to Ali, the
altseason indicator is flashing buying opportunity and ETH’s MVRV
momentum nears a key moving average suggesting significant upside
potential. The analyst also mentioned the spot exchange-traded
flows (ETF) Inflows and increasing whale Activity. Ali then
suggested that Ethereum could test $4,000 and $6,000 levels based
on an ascending parallel channel. He also highlighted a bullish
theory on ETH’s potential to hit $10,000. But there is another
bullish theory!#Ethereum could be mirroring the price action of the
S&P500, which puts a $10,000 target on
$ETH.https://t.co/ifn1zGnn9x — Ali (@ali_charts) November 19, 2024
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