Ethereum open interest data rises $1.5 million in 3 weeks, what does this mean?

The value of Ether (ETH) has increased recently, and so has Ethereum open interest. While this indicates bullish trader sentiment, it also indicates impending volatility and calls for caution in the market.

According to CryptoQuant analyst Burak Kesmeci, Ethereum open interest data has increased by almost $1.5 billion in the past three weeks.

Ethereum open interest rises

Open interest refers to the number of open long and short positions for financial instruments. A higher open interest value signifies greater confidence in an asset’s price trajectory, while a lower value is a sign of uncertainty. At the time of writing, data from CoinGlass showed that total open interest in Ethereum futures across all exchanges was $14.96 billion, a 24-hour increase of 7.43%.

Kesmeci linked the ETH open interest data to the launch of U.S. spot Ethereum ETFs, revealing that the metric recorded a local peak on July 23, when the funds went live on trading platforms. However, open interest data eventually fell by around $600 million, allowing the market to “take a breather.”

The crypto market could witness another drop in open interest data from now on because as leveraged trading increases, so do the chances of liquidation. When liquidations are triggered, the market also experiences high volatility.

“So I think OI is one of the data points that you need to monitor closely,” the CryptoQuant analyst added.

ETH Price Outlook

At press time, ETH was up 4% in the last 24 hours, changing hands at around $3,383. However, the asset has fallen 3% in the past week and slightly in the past month. Ether posted a surge in the 24 hours after the release of Ethereum ETFs, but its performance has not been encouraging since then.

Spot ETFs, meanwhile, have seen global outflows in three of their four trading days. After an entry of $106 on July 23, the funds recorded outflows of $133 million, $152 million and $162 million on the second, third and fourth trading days.

Analysts insist that ETFs would have a weaker effect on Ethereum than Bitcoin because the multiplier effect of the former is smaller than that of the latter. However, ETH is expected to rebound in the coming months as the market is still in a bullish cycle.

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