Data shows that Ethereum open interest increased by almost $2 billion over the past day, a sign of leveraged betting openings.
Ethereum Open Interest observed a sharp rise
As CryptoQuant community analyst Maartunn pointed out in a new article on X, Open Interest just increased for Ethereum. This indicator tracks the total amount of ETH-related derivatives positions currently open on all centralized exchanges.
When the value of the measure increases, it means that investors are opening new positions in the market. Typically, overall industry leverage increases alongside new positions, so the asset could experience more volatility following such a trend. On the other hand, a falling indicator implies that the number of positions is decreasing, whether as a result of voluntary closures or forced liquidations. This type of deleveraging can lead to a more stable ETH price.
Now here is the chart shared by Maartunn which shows the trend of Ethereum Open Interest over the last few weeks:
The value of the metric seems to have been going up in recent days | Source: @JA_Maartun on X
As seen in the chart above, Ethereum Open Interest saw an increase of almost $2 billion over the past day, reflecting an increase of over 10%. This growth in market speculation has been accompanied by the wave of recovery that ETH has experienced over the past 24 hours. Strong price action, such as a rally, tends to draw attention to the asset, so Open Interest usually increases alongside it.
Although this trend may be normal, a particularly strong rise in the indicator may be something to watch out for. In the chart, the analyst highlighted cases where the derivatives market faced a similar level of overheating to the current one. It would appear that the last three cases all coincided with some sort of peak for Ethereum. “Historically, 75% of these moves mean going backwards,” Maartunn noted. It now remains to be seen whether similar volatility will follow this time around.
Separately, Ethereum spot exchange-traded funds (ETFs) saw net outflows over the past week, data from SoSoValue shows.
How the weekly netflow related to ETH spot ETFs has changed since their conception | Source: SoSoValue
In total, spot ETH ETFs in the United States saw outflows of nearly $508 million. This is the third largest weekly negative net flow the funds have seen so far in their history.
Since spot ETFs provide regulated off-chain access to cryptocurrencies, they can be a popular mode of investment among traditional institutional entities. Given this, capital outflows may imply the presence of negative sentiment among these large investors.
Despite the bearish mood, Ethereum managed to rebound to start the new week.
ETH Price
Ethereum returned above $3,600 with a 4% rally over the past day.
The trend in the ETH price over the last five days | Source: ETHUSDT on TradingView
Featured image from Dall-E, SoSoValue.com, CryptoQuant.com, chart from TradingView.com
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