Data shows that Ethereum’s open interest has risen by nearly $2 billion in the past day, a sign that leveraged bets are opening up.
Ethereum open interest observed a significant rise
As CryptoQuant community analyst Maartunn pointed out in a new post on X, Ethereum’s open interest has just spiked. This indicator tracks the total amount of ETH related derivatives positions currently open across all centralized exchanges.
When the value of the indicator increases, it means that investors are opening new positions in the market. Leverage across the sector generally increases with new positions, so such trends can be followed by further asset volatility. On the other hand, if the indicator is falling, it means that the number of positions is decreasing, whether as a result of intentional closures or forced liquidations. This type of deleveraging could lead to more stability in the ETH price.
Here is a chart shared by Maartunn showing the trend of Ethereum open interest over the past few weeks.
The value of the metric seems to have been going up in recent days | Source: @JA_Maartun on X
As shown in the chart above, Ethereum open interest has risen by almost $2 billion over the past day, reflecting an increase of over 10%. This rise in market speculation occurred in parallel with the surge in recovery that ETH has experienced over the past 24 hours. Sharp price movements, such as rallies, tend to draw attention to an asset, so open interest typically rises with it.
Although this trend may be normal, you should be wary of particularly rapid increases in indicators. In his chart, the analyst highlights instances where derivatives markets faced similar levels of overheating. The last three instances all appear to have matched some kind of top of Ethereum. “Historically, 75% of these moves represent a setback,” Martun said. It remains to be seen whether similar volatility will continue this time around.
In other news, Ethereum spot exchange-traded funds (ETFs) recorded net outflows over the past week, SoSoValue data shows.
How the weekly netflow related to ETH spot ETFs has changed since their conception | Source: SoSoValue
In total, nearly $508 million was drained from the U.S. ETH Spot ETF. This is the third-largest weekly negative net flow in the fund’s history.
Spot ETFs offer a regulated off-chain route to cryptocurrencies and are therefore likely to become a popular investment mode among traditional institutional investors. Considering this, the outflows may indicate that there is negative sentiment among these large investors.
However, despite the bearish mood, Ethereum managed to recover to start the new week.
ETH price
Ethereum has risen 4% over the past day to above $3,600.
The trend in the ETH price over the last five days | Source: ETHUSDT on TradingView
Featured images from Dall-E, SoSoValue.com, CryptoQuant.com, charts from TradingView.com
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