Ethereum open interest hits record high: Will ETH follow suit?

• ETH’s funding fee additionally elevated over the previous few days. 
• In case of a correction, ETH may drop to $3.3k once more. 

Because the king of altcoins, Ethereum [ETH], inches in direction of the $3.7k mark, it has reached a outstanding milestone. One among ETH’s key derivatives metrics has reached an all-time excessive. However is that this a bullish sign, or will it have a unfavourable affect on ETH’s worth motion?

Ethereum’s report may appeal to bears

Ethereum’s Open Curiosity (OI) has reached an all-time excessive of over $17 billion. A rise in OI implies that extra merchants are coming into positions in a futures or choices contract, and more cash is probably going coming into the market. 

Supply: CryptoQuant

In actual fact, one other derivatives metric, the funding fee, additionally witnessed a substantial rise over the previous few days. An increase within the metric is bullish, because it normally signifies an optimistic market, the place merchants are prepared to pay extra to maintain their lengthy positions.

Although at first look this may give a notion of a continued worth rise, the truth could be completely different. As evident from the chart above, each time open curiosity spiked sharply, it was adopted by worth corrections.

Such episodes occurred in November 2021 and June 2024. On each of those events, the spike in OI considerably marked a market high. 

Will historical past repeat itself?

To verify whether or not ETH was at its market high, AMBCrypto dug deeper into the token’s on-chain information. As per our evaluation of CryptoQuant’s data, ETH’s alternate reserve was rising—an indication of rising promoting strain.

Moreover, its stochastic was additionally within the overbought zone, hinting at an increase if sell-offs, which regularly ends in worth corrections.

Other than this, we additionally discovered that ETH’s vendor exhaustion fixed peaked. It was clear from the chart that each time the metric hit a high, ETH’s worth plummeted considerably within the following days. 

Supply: Glassnode

Nevertheless, it was attention-grabbing to notice that the Relative Power Index (RSI) was but to enter the overbought place. This steered that there was nonetheless room for extra shopping for, which may help Ethereum keep a bullish momentum.

On the time of writing, the king of altcoins was testing a help. If the RSI is to be believed, then Ethereum may efficiently take a look at the extent and proceed to maneuver northward. 

Learn Ethereum’s [ETH] Value Prediction 2024–2025 

Nevertheless, if the large rise in OI and funding fee causes a worth decline, like what occurred in historical past, then ETH may drop to its decrease help.

To be exact, a drop from the present worth stage may first push ETH all the way down to $3.38k once more.  

Supply: TradingView