Ethereum Open Interest Rises By $1.5 Billion – What This Means
27 July 2024 - 9:30PM
NEWSBTC
Ethereum (ETH) recorded a significant loss in price this week
following the trading debut of Ethereum spot ETFs. According to
data from CoinMarketCap, ETH has declined by 6.60% in the last
seven days, falling as low as $3,100. However, amidst this price
crash, CryptoQuant analyst burakkesmeci has made an important
observation with a potential impact on market movement. Related
Reading: Ethereum Targets Recovery: Can It Mirror Bitcoin’s
Performance? Ethereum Open Interest Surges By $1.5 Billion In Three
Weeks In a Quicktake post on CryptoQuant, burrakesmeci shared that
the Open Interest (OI) on Ethereum has risen by a remarkable $1.5
billion in the past three weeks. For context, Open Interest refers
to the total number of outstanding positions for a particular
asset. Generally, an increase in Open Interest indicates a rise in
market participation for any asset i.e., more traders are opening
long or short positions on Ethereum. With this rise in open
positions, there is likely an equal increase in the number of
leverage trades. Burakkesmeci expressed that a surge in
liquidations should also be expected as leveraged trades, which are
open with borrowed funds, are always closed once an insufficient
price margin occurs. Furthermore, This increase in leverage trading
liquidations is expected to produce a high market volatility,
resulting in unpredictable and rapid price movements. In
regards to price action, a rise in Open Interest indicates the
current market trend is gaining stronger. Therefore, despite
Ethereum’s price dip in the last week, the prominent altcoin is
likely to extend its 7.01% gain of the past three weeks in the
coming months. At the time of writing, Ethereum presently
trades at $3,278.80 with a 3.46% increase in the last 24 hours. The
altcoin appears to be attempting a market recovery with a strong
resistance expected at the $3,500 region. However, if the current
buying pressure proves insufficient to break past this barrier,
Ethereum could return to the $3,100 price mark or even slide as low
as $2,900. Related Reading: Ethereum Whales Rapidly Accumulate ETH
Amid Price Decline Ethereum Spot ETFs Net Outflows Reach $469
Million In another development, the newly launched Ethereum Spot
ETF market has now recorded a cumulative outflow of $469.83 million
in its first three days of trading. Data from Farside Investors
identifies Grayscale’s ETHE with a total outflow of $1.51 billion
as the major cause of this current market position.
Meanwhile, BlackRock’s ETHA continues to lead the market with
inflows worth $354.8 million, followed closely by Bitwise’s ETHW
with $265.9 million. Like their Bitcoin counterparts, the
debut of the Ethereum spot ETF has been accompanied by a
significant price drop. However, it remains uncertain whether these
Ethereum ETFs will eventually trigger a price surge akin to the one
experienced in the Bitcoin market during the initial two months of
BTC Spot ETF trading. Featured image from Investopedia, chart from
Tradingview.com
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