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The price of Ethereum saw a significant rise last week, returning above the $3,500 level for the first time since July 2024. This one-week performance represents a change in the fortunes of the “king of altcoins,” which have slowed somewhat. After a great start to November.
While Ethereum’s current price chart suggests that there is still room for upward movement, some on-chain signals indicate that the market may be on the cusp of a pullback. One of these signals is ETH open interestwhich recently reached a new all-time high.
Is ETH price at risk as open interest rises?
In a Quicktake post on the CryptoQuant platform, an analyst with the pseudonym ShayanBTC said: open Although Ethereum’s price trajectory looks bullish at the moment, investors need to tread carefully. This prediction is based on the “worrying divergence” in Ethereum futures market metrics.
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Specifically, the relevant futures market metric here is open interest, which tracks the total amount of open futures or derivatives contracts for a given cryptocurrency (ETH, in this case) on the market at a given time. It basically evaluates how much money is being pumped into Ethereum futures at each moment.
According to data from CryptoquantEthereum’s open interest has reached a new all-time high of $17 billion. Typically, a rise in open interest signals a shift in investor sentiment, with traders becoming more speculative and preparing for potential market movement.
However, ShayanBTC noted that the notable rise in open interest was not accompanied by a new all-time high for the Ethereum price. According to a Quicktake analyst, this divergence between price and open interest indicates a potential increase in volatility and significant liquidation cascades.
ShayanBTC added:
If the Ethereum price experiences a sudden pullback or consolidation, highly leveraged positions from futures traders could trigger a wave of forced liquidations, resulting in a rapid price decline.
As of this writing, Ethereum price It sits just below $3,700, reflecting an increase of over 3% over the past 24 hours. According to CoinGecko data, the value of the altcoin has risen by approximately 8% in the past seven days.
Ethereum whales are carrying their bags
Coincidentally, other on-chain data appeared to counter the bearish outlook for the second-largest cryptocurrency. In a November 30 post on the X platform, prominent cryptocurrency analyst Ali Martinez said open That a certain category of large investors in Ethereum was active in the market.
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Data from CryptoQuant shows that Ethereum whales with between 100,000 and 1,000,000 coins have purchased more than 280,000 ETH in the past four days. This level of buying activity from this influential class of investors can be considered bullish for the altcoin.
Featured image created by DALL-E, chart from TradingView
