Derivatives trader Gordon Grant has warned that Ethereum (ETH) investors could face a similar decline to that seen in early August.
The cryptocurrency, which is among the largest by market capitalization, lost as much as 20 percent of its value at the beginning of August. It appears that funding rates on perpetual Ethereum futures contracts have reached levels seen before the August crash.
Gordon Grant said that the perpetual futures markets were in a vulnerable position at that time and that a sell-off could occur due to leveraged positions in the market.
Several different factors can trigger it
The Ethereum price was traded at $3,316 on July 29, but fell 22 percent in the following days. Open interest-weighted funding rates have increased to 0.0116 percent, the highest level since July 29.
The August decline was largely attributed to the Bank of Japan’s interest rate decision, but futures markets are still vulnerable to a similar macro development, according to Grant.
According to Grant, a sudden decline in Nvidia or other successful stocks, a loss of momentum in Chinese stock markets or escalating tensions in the Middle East could also affect the market. The investor noted that such factors could lead to a heavy decline in the market.
Stay tuned for new information.
