Data shows that Ethereum open interest has recently surged to a historical high (ATH) of about $16.8 billion.
Ethereum open interest has surged recently
In a new post on X, CryptoQuant community analyst Maartunn discussed the latest trends in Ethereum open interest. Here, 'open interest' is an indicator used to track the total amount of currently open ETH-related derivative positions across all centralized exchanges.
Below is the chart shared by the analyst, showing the trend of this indicator over the past week.
The chart shows that Ethereum open interest has increased significantly over the past day. This means investors have just opened many new positions in the derivatives market.
Generally, whenever new positions emerge, the total leverage in the market rises, increasing the likelihood of large-scale liquidation events.
A large-scale liquidation event, commonly known as a squeeze, can be a dramatic occurrence where a significant number of liquidations happen simultaneously, feeding back into the price movements that led to the liquidations. This provides more fuel for price changes, leading to further liquidations.
Ethereum has been rising recently, so some speculative interest is normal, but the scale of the latest open interest growth may be concerning. This indicator has grown by about 19% in the last 24 hours, reaching a new high of around $16.8 billion.
As has often happened historically, the rapid growth of Ethereum open interest may again lead to asset price volatility. 'This will definitely spark intense debates,' Maartunn noted.
Theoretically, the volatility resulting from this indicator's rise could cause the asset to move in either direction. However, as this growth is accompanied by an increase in ETH price, these positions may be long.
Indeed, as an analyst pointed out in a CryptoQuant Quicktake post, Ethereum's funding rate has been positive recently, indicating that long positions have consistently outnumbered short positions.
Typically, squeezes are more likely to impact the side of the market with larger positions. Therefore, if an overheated derivatives market liquidates in a tumultuous storm, Ethereum's price may drop.
ETH Price
At the time of writing, Ethereum is trading at around $3,500, having risen nearly 7% in the past seven days.
