Ethereum
$16B Ethereum (ETH) Open Interest Hints at $4,000 Price Rebound
Ethereum Price vs. ETH Open Interest | Change machine
According to the chart above, ETH open interest fell from $16.97 billion on June 6 to $16.35 billion at the time of reporting on June 9, reflecting a drop of 620 millions of dollars.
This shows that while the ETH price had fallen 7.38% from its weekly high on June 6, open interest was only down 3.65%, almost half of the drop in price.
When open interest falls more slowly than price during a market decline, it can be interpreted as a bullish recovery signal for two main reasons.
Investor Confidence: A smaller decline in open interest compared to Ethereum’s price decline suggests that a significant number of LONG contract holders chose to maintain and defend their positions during Friday’s market crash.
This indicates widespread confidence in the asset’s recovery potential, as investors do not close their contracts quickly.
Potential for short squeezes: Second, if ETH price begins to rebound by 2.5% over the weekend and continues to expand over the coming week, many active bearish positions may be forced to make quick purchases to cover their SHORT contracts. This scenario can lead to a short squeeze, accelerating the upward movement of prices.
In summary, the disparity between the rate of Ethereum price decline and open interest can be seen as a positive sign, suggesting underlying strength and potential for a near-term bullish rebound.
ETH Price Forecast: $4,000 Target Still in Play
After Friday’s stock market crash, speculative ETH traders held on to their $16 billion futures contracts, sending Ethereum price into an instant 2.5% rebound to reclaim the territory of $3,700 on June 9.
But as the ETH ETF listing approaches, Ethereum could face additional buying pressure as strategic traders look to list before large inflows begin.