- Ethereum may be exposed to volatility as Open Interest and appetite for leverage explode.
- Determining why long liquidations might be huge in case price retraces in favor of the bears.
As a seasoned analyst with years of experience navigating the ever-evolving cryptocurrency market, I find myself intrigued by the recent developments in Ethereum [ETH]. The surge in Open Interest and appetite for leverage suggests that we might be in for a bumpy ride, with potential volatility on the horizon.
This week, Ethereum [ETH] has drawn fresh interest, a fact evident in its increasing Open Interest. This surge follows the return of optimistic market movements over the weekend.
In the past day, there’s been a significant surge in the activity of the leading altcoin’s Open Interest. This is the highest level it’s reached in the last five months, prompting a closer look at what this development could imply for Ethereum (ETH).
Based on the fastest surge in price since May, it seems Ethereum could experience increased market fluctuations ahead.
The increase in Open Interest reflects Ethereum’s rising demand for borrowing funds. Over the past day, the Ethereum estimated leverage ratio has significantly increased and is approaching its record high from 2024.
The increase in projected leverage ratios, along with growing Open Interest, indicated a high level of action within the derivatives market.
It also means that Ethereum is now more exposed to more liquidations, and directional swings.
Is Ethereum headed for more liquidation?
It’s not automatically clear where the market is heading just because there’s an increase in both indicators. Nevertheless, it’s worth noting that the price of Ethereum rose by 6.53% during the trading day on October 14th.
This suggested that the leverage and Open Interest were in favor of the bulls.
Currently, Ethereum’s recent surge has placed it within a brief period of resistance. At the moment of reporting, the price stood at approximately $2,615.
It’s quite possible that the selling momentum for Ethereum might increase significantly, particularly if its price reaches around $2,700.
The current rally may have triggered expectations of an extended rally, thus encouraging more appetite for leverage. This may also set ETH up for a potential liquidation event, if price unexpectedly pulls back.
A possibility is that the ongoing high demand, which was particularly noticeable over the weekend, could further escalate prices.
As an analyst, I’ve noticed a significant trend regarding Ethereum long liquidations. On October 1st, we saw a peak of approximately $135 million in liquidations. However, over the past few days up to the 14th of October, this figure has significantly decreased, standing now at around $2.46 million.
Meanwhile, short liquidations peaked above $49 million in the last 24 hours.
Read Ethereum’s [ETH] Price Prediction 2024–2025
In simpler terms, short liquidations (or sell-offs) have dropped to around $220,000, showing a significant change as the market trend has become more positive. This suggests that the shift favored buyers, or long positions, instead of sellers.
They will thus be exposed, in case an unexpected pullback occurs.
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2024-10-15 20:07