Ethereum
Ethereum Open Interest Gains $1 Billion – Impact on ETH?
- While open interest has increased, the funding rate has remained stalled.
- The altcoin price may continue to hover between $3,400 and $3,600 in the near term.
One day later Ethereum [ETH] Open interest fell to $13.14 billion, adding another billion to its value. At press time, Open Interest (OI) stood at $14.10 billion, according to Glassnode data.
OI is the value of current futures contracts in the market. Every time it decreases, it means traders are closing cryptocurrency-related positions. However, an increase suggests otherwise.
Speculation is a ticket to a new high
Thus, the rise in Ethereum contracts indicates increased speculative activity regarding the altcoin. In many cases, an increase in OI strengthens price direction.
For ETH, it may be no different. At the time of writing, ETH changed hands at $3,563, representing a slight increase of 1.10% over the past hour.
At first glance, this could be the start of a significant uptrend for the cryptocurrency.
Source: Glassnode
However, the trading volume decreased by 35.36% in the last 24 hours. The drop in trading volume is a sign that activity involving ETH was lower in the spot market.
If spot market activity continues to decline while derivatives market trading increases, the price of ETH could stagnate around $3,500 to $3,600.
But if buying pressure in the spot market increases, the altcoin could leap in the direction of $3,800.
Skepticism persists
Despite the outlook, Ethereum’s funding rate has remained stagnant since June 8. The funding rate is the cost of holding an open position in the derivatives market.
If funding is positive, it means the contract price is trading at a premium to the spot price. In a situation like this, the longs pay the shorts to keep their positions open.
On the other hand, negative financing implies that short positions yield long positions. Additionally, the contract value of the cryptocurrency is reduced.
For ETH, the low funding rate and high price means this one-time volume could soon start to increase.
If so, a reasonable conclusion could be a bullish trend for Ethereum. Nevertheless, the cryptocurrency price may not reach $4,000 in the coming week.
Source: Santiment
Additionally, AMBCrypto looked at the taker’s sell ratio. To get this ratio, we need to divide the sales volume by the total perpetual swaps.
When the ratio is below 0.5, it means that the selling pressure has decreased. However, a value greater than 0.5 indicates the sales are dominant on the market.
Realistic or not, here it is Market capitalization of ETH in BTC terms
At the time of writing, Ethereum’s put-to-take ratio was 0.50, according to data from CryptoQuant. If the condition remains the same, ETH price might struggle to get closer to $4,000 as mentioned earlier.
In the coming week, the value of the cryptocurrency could trade between $3,400 and $3,600, similar to previous weeks.