Ethereum’s high timeframe structure exposes the aftermath of leveraged carnage. Open interest fell sharply, reflecting widespread liquidations across the futures market. As leverage is depleted and traders are weeded out, the path forward will depend on whether spot demand can fill the void created by the OI collapse.
Recent market volatility presents an important opportunity to assess the underlying health of various crypto assets. inside the x postDaan Crypto Trades, a full-time crypto trader and investor, provided a compelling analysis of Ethereum’s high timeframe charts, focusing specifically on: Open interest (OI), which shows exactly how much speculative excess has been washed away. ETH in particular was hit hard in the process.
Why this flash could be the basis for Ethereum’s next move
What’s encouraging, according to Daan, is that ETH’s open interest is currently at levels comparable to when ETH was trading at $3,000. Meanwhile, prices are currently hovering around $4,000. For Daan, a simple rule of thumb to determine if a healthy reset has occurred is if open interest is lower than the previous price at a given price.
Typically, as prices rise, open interest also tends to increase as capital increases flowing to the derivatives market and vice versa. This relative comparison of OI and price is very important. price OI trends typically occur in both directions.
Some coins are used as margin, which can increase OI numbers. market. Therefore, the relative level to be aware of is between OI and price, which is more important than the absolute number.
Meanwhile, leverage is returning to the Ethereum market. As a master of crypto, an observer of market trends, highlightedETH open interest surged 8.2% in less than 24 hours, accelerating the ongoing price movement. The surge in open interest suggests that traders are once again opening aggressive long positions after the recent flush, a common pattern that often carries more risk than reward.
Masters of Crypto Recommends Caution Framing This Leverage-Driven Situation rally In historical context, approximately 75% of bull markets actively fueled by such rapid leverage increases tend to reverse, and only 25% maintain upward momentum.
Gentle steps towards next expansion
Ethereum’s macro trend continues to rise despite short-term movements. Analyst EtherNashonaL said: emphasized After breaking out of a long-term downtrend, ETH is currently retesting only the demand zone and trend line, which is a retest of a healthy bullish move typical of a strong market structure.
However, analysts pointed out that fluctuations on shorter time frames do not define a trend, and it is the longer time frames that hold true directional signals. Currently, the macro trend of ETH is still upwardAnd the whole picture has yet to be told. ”
Featured image from Pixabay, chart from Tradingview.com
