Ethereum Open Interest Nears All-Time Highs Ahead Of Merge
August 10 2022 - 3:00PM
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Data shows the Ethereum open interest has surged up to near
all-time high values as the ETH 2.0 merge comes closer. Ethereum
Open Interest Has Sharply Risen Up Recently As per the latest
weekly report from Arcane Research, the ETH open interest in
futures and perps has surged up to 4.2 million ETH in recent days.
The “open interest” is an indicator that measures the total amount
of Ethereum futures and perps contracts currently open in the
market (denominated in ETH). The metric includes both shorts and
longs. When the value of this indicator is high, it means a large
number of contracts are currently open in the market. Such values
usually lead to higher volatility in the price of the crypto.
Related Reading: Ethereum Investors Close 300k Long Positions on
Bitfinex, Rally To Stop Soon? On the other hand, low values of the
metric suggest many contracts have been closed on the market. This
can result in lesser volatility for the coin. Now, here is a chart
that shows the trend in the Ethereum futures and perps open
interest over the past year: The value of the metric seems to have
moved up recently | Source: Arcane Research's The Weekly Update -
Week 31, 2022 As you can see in the above graph, the Ethereum open
interest has observed uptrend in the past week and is now near the
all-time high value. The current value is the 2nd highest ever
recorded for the indicator, just below the 4.21 million ATH set
back on July 14th of this year. While the massive hedging amid
arbitrage opportunities like Celsius’ bankruptcy was behind the
last peak, the report notes that the current rise is likely caused
by trading strategies ahead of the 2.0 merge. Related Reading:
Ethereum scaling solution XDC Network presents XDPOS2.0, an
enhanced consensus for scalability and forensics. The ETH futures
market is also observing massive discounts at the moment. Normally,
high open interest and negative basis like right now lend for the
possibility of a short squeeze (an event where short liquidations
cascade together due to a sudden swing in price). But Arcane
Research points out that the latest increase in leverage is likely
from more conservative risk management, which would mean that any
possible short squeeze that might take place currently won’t be too
significant. ETH Price At the time of writing, Ethereum’s price
floats around $1.7k, down 1% in the past week. Over the last month,
the crypto has gained 40% in value. The below chart shows the trend
in the price of the coin over the past five days. Looks like the
value of the crypto has come down during the last two days |
Source: ETHUSD on TradingView Featured image from Kanchanara on
Unsplash.com, charts from TradingView.com, Arcane Research
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