Ethereum (ETH) open interest has been steadily decreasing throughout 2024 and is now approaching January levels. Despite the dynamic start to the year, Ethereum’s derivatives activity has slowed significantly in recent months, reflecting the general bear market sentiment.

Open interest declines as derivatives trading slows

Ethereum’s derivatives trading has been steadily decreasing in 2024, especially since the local peak in June. Open interest has been on a downtrend, returning to January levels. This decline is not a one-time event, but part of a trend that has been consistently low throughout the year.

What Should Market Participants Do?

As ETH open interest declines, investors are waiting on the sidelines. This decline could be a potential indicator of future price action. Funding rates have also fallen below the 50-day moving average, adding to the challenges in the derivatives market.

Market Impacts

The continued decline in open interest and funding rates has significant implications for Ethereum and the broader market. Historically, ETH funding rates have been mostly positive, but have been falling more frequently in the past two months. This could impact the DeFi space and other related sectors.

Possibility of a Short Squeeze

There were liquidations among ETH pessimists in September. Approximately 30% of leveraged positions are short ETH. Market participants should be careful to monitor the selling pressure from whales.

Ethereum Faces Challenges

Open interest has decreased rapidly following the August 5 correction. ETH’s struggle to maintain its dominance continues. While small investors are liquidating their positions, large investors continue to accumulate ETH. The perception of Ethereum as an ultra-sonic currency is changing, raising concerns about its long-term value proposition.

So, do you think Ethereum will be able to overcome these challenges? Share your thoughts in the comments! 🚀#Ethereum#CryptoCurrency