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Ethereum price has been on a notable run this past week, returning above the $3,500 level for the first time since July 2024. This single-week performance represents a change in fortunes for the “king of altcoins,” which It slowed down a little. after a great start to the month of November.
While Ethereum’s current price design suggests there is still room for an upward move, certain on-chain signals indicate that the market could be on the verge of a pullback. One of these signals is ETH open interest, which recently hit a new all-time high.
Is ETH price at risk with rising open interest?
In a Quicktake post on the CryptoQuant platform, an analyst with the pseudonym ShayanBTC has revealed that while Ethereum’s price trajectory appears bullish at the moment, investors should proceed with caution. This projection is based on the “alarming divergence” in ETH futures market metrics.
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Specifically, the relevant futures market metric here is open interest, which tracks the total number of open futures or derivatives contracts of a particular cryptocurrency (ETH, in this case) in the market at any given time. It basically evaluates the amount of money being invested in Ethereum futures at any given time.
According to data from CryptoQuant, Ethereum open interest has reached a new all-time high value of $17 billion. Typically, rising open interest indicates a change in investor sentiment, with traders increasingly speculating and preparing for a potential market move.
ShayanBTC, however, noted that the notable increase in open interest was not accompanied by a new all-time high for the price of Ethereum. According to the Quicktake expert, this divergence between price and open interest points to a possible increase in volatility and significant liquidation waterfalls.
ShayanBTC added:
If Ethereum price faces a sudden drop or consolidation, futures traders’ overleveraged positions could trigger a wave of forced liquidations, leading to rapid price declines.
At the time of writing, Ethereum price sits just below $3,700, reflecting an increase of over 3% in the last 24 hours. According to data from CoinGecko, the value of the altcoin has increased by almost 8% in the last seven days.
Ethereum whales load their bags
Fortunately, other on-chain data has emerged to counter the bearish forecast for the second-largest cryptocurrency. In a Nov. 30 post on Platform X, prominent crypto analyst Ali Martinez revealed that a particular class of large Ethereum investors has been active in the market.
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Data from CryptoQuant shows that Ethereum whales holding between 100,000 and 1,000,000 coins have purchased more than 280,000 ETH in the last four days. This level of buying activity from such an influential class of investor could be considered bullish for the altcoin.
Featured image created by DALL-E, TradingView chart
