Ethereum's price has rebounded at the critical $3.5K support level, maintaining its bullish trajectory. However, while price action indicates potential for upward movement, the futures market metrics reveal an alarming divergence that could significantly influence market dynamics.
The open interest metric, which tracks the total number of open perpetual futures positions across all exchanges, has reached a new all-time high. This spike suggests an unprecedented level of speculative activity in Ethereum’s derivatives market.
Interestingly, this surge in open interest is occurring without a corresponding new all-time high in Ethereum’s price. This divergence raises concerns of increased volatility and substantial liquidation cascades. If Ethereum's price faces a sudden downturn or consolidation, the overleveraged positions from futures traders could trigger a wave of forced liquidations, leading to rapid price declines.
Written by ShayanBTC
