In short
Ethereum's open contracts have decreased from $14.5 billion to $13.94 billion, indicating reduced market risk and potential bearish pressure.
Increased inflow to exchanges signifies greater selling pressure, which may limit short-term price growth of cryptocurrencies.
Unless buying pressure rebounds, ETH may drop to $3,315. A rebound to $4,500 or new highs depends on a stronger OI recovery.
The price of Ethereum (ETH) has risen above $3,900 again. This rebound suggests that the price of this altcoin may rise further before the end of the year.
But does this mean that the cryptocurrency can surpass its previous all-time high in such a short time? This on-chain analysis reveals whether this is possible.
Ethereum has lost bullish dominance in two main zones.
Ethereum is currently trading at around $3,939, indicating that the price of this altcoin has risen by 67.30% in 2024. One key indicator that has played a role in ETH's rise this year is its open interest (OI).
Open Interest (OI) refers to the total value of all outstanding contracts in the market. When it increases, it means more liquidity is flowing into contracts related to cryptocurrencies. In the derivatives market, this indicates rising buying pressure, which could lead to price increases.
On the other hand, a decrease in open interest indicates selling pressure. A decline in open interest suggests that traders are increasingly closing positions and withdrawing liquidity from the market.
According to data from Santiment, Ethereum's OI climbed to $14.5 billion yesterday (December 15). However, as of the time of writing this article, that figure has dropped to $13.94 billion, indicating a reduction in exposure to ETH. Given this situation, this decline suggests that if OI maintains this level, the price of Ethereum could drop again.
Another indicator supporting this bias is Ethereum's exchange inflow. Exchange inflow is the average number of tokens sent to exchanges per transaction. High values indicate that investors are transferring larger amounts, suggesting increased selling pressure, which could lead to price declines.
However, the low exchange inflow in this indicator suggests that selling pressure has decreased. According to CryptoQuant, exchange inflows have increased since December 14, indicating that selling pressure around ETH has increased.
If this situation continues, it may hinder the cryptocurrency from rising to $4,500 or setting a new all-time high before the end of 2024.
ETH Price Prediction: Currently at $4,500
According to the daily chart, the Parabolic Stop and Reverse (SAR) indicator has risen above the ETH price. SAR is a technical indicator that shows whether the cryptocurrency is encountering resistance or solid support.
When the dashed line is below the price, it indicates significant support that may drive the price up. However, currently, the dashed line is above the price of Ethereum. Therefore, the cryptocurrency faces resistance.
As long as ETH's trading price is below this indicator, there is a potential for price declines, with a possible target price around $3,315. If so, then the price of Ethereum may not reach a new all-time high before the end of the year.
However, if open interest increases and exchange inflows drop to extremely low points, the prediction may become invalid.
