Ethereum faces rising selling pressure with increased exchange inflows.
Declining Open Interest signals reduced liquidity and potential price challenges.
Ethereum’s price has surged 1.44% over the past 24 hours, trading at $4,018, with trading volume spiking by 40% during the same period. The altcoin has gained 29% over the past month and 67.30% year-to-date in 2024. However, recent developments suggest Ethereum’s bullish momentum could face challenges.
ETH Price Chart, Source: Sanbase
One critical metric influencing ETH’s rally this year has been its Open Interest (OI), which represents the total value of open contracts in the derivatives market. When OI increases, it signals heightened liquidity and buying pressure, often leading to higher prices. Conversely, a drop in OI indicates selling pressure as traders close positions and withdraw liquidity. Data from Santiment reveals Ethereum’s OI peaked at $14.50 billion on December 15 but has since declined to $13.94 billion. This reduction suggests reduced market exposure to ETH, posing potential risks for further price declines.
Meanwhile, another concerning indicator is Ethereum’s exchange inflow, which measures the mean amount of tokens sent to exchanges. Higher inflows often imply increased selling pressure. Research reveals, that exchange inflows for ETH have risen since December 14, indicating growing sell-offs that could hinder Ethereum from breaking above the $4,500 range or reaching a new all-time high before the year ends.
ETH To Surge Or Decline In Short Term?
Market sentiment is further complicated by whale activity. Whales now hold 44% of Ethereum’s supply, nearing the 47% retail investors hold. Recent whale behavior—depositing 40,000 ETH into exchanges as prices neared $4,000—triggered a 7% drop, reflecting deliberate market manipulation.
Despite Bitcoin’s surge to an all-time high of $106,488, Ethereum continues to shadow BTC’s moves. With rising exchange inflows and declining OI, ETH’s journey to reclaim $4,500 faces significant hurdles. Analysts predict further volatility, with potential buying opportunities near $3,700 if market sentiment shifts.
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