- Ethereum’s Open Interest has rallied steadily since the beginning of September.
- With prices down 5% this month, spot market traders stall on accumulation.
Ethereum [ETH] futures Open Interest has risen by 9% since the beginning of September despite the coin’s narrow price movements within that period.
Read Ethereum’s [ETH] Price Prediction 2023-24
According to data from Coinglass, the leading altcoin’s Open Interest at press time was $5.43 billion.
Source: Coinglass
Open Interest refers to the total number of outstanding contracts in a derivatives market. It is a measure of the overall activity in a market and can be used to gauge investor sentiment.
When ETH’s Open Interest increases, it means that the total number of ETH Futures contracts that have not been settled has increased. It is a bullish signal as it suggests that more investors are opening new positions in ETH and that there is increasing demand for the asset.
However, the month-long uptick in Open Interest has been accompanied by “neutral to negative” funding rates, crypto research firm Kaiko noted in a recent post on X (formerly Twitter).
#ETH open interest has increased since the start of September.
Funding rates remain neutral to negative, suggesting the market lacks direction. pic.twitter.com/EHESMQMncw
— Kaiko (@KaikoData) October 10, 2023
Positive funding rates indicate buyers are paying sellers to keep their contracts open, which suggests the market is bullish.
On the other hand, negative funding rates indicate that sellers are paying buyers to keep their contracts open, which suggests that the market is bearish.
When an asset sees neutral to negative funding rates in its futures market, it suggests that the market lacks a clear direction or bias. It connotes that there isn’t a strong bullish or bearish sentiment dominating the market, and traders remain unclear about the market’s next direction.
The downtrend is apparent in the coin’s spot market
At press time, an Ether coin sold for $1,560, according to data from CoinMarketCap. The month so far has been marked by a decline in the ETH’s value. After its brief stint above $1700 on 2 October, the alt’s price has since trended downward. In the last week, ETH’s price dipped by 5%.
The steady decline in the alt’s value has strengthened the downtrend in the coin’s spot market. As of this writing, ETH’s price observed on a daily chart traded dangerously close to the lower band of its Bollinger Bands indicator.
When an asset’s price trades this way, it suggests that selling pressure significantly outweighs buying momentum.
Although it signaled potential oversold conditions and an imminent short-term price bounce or retracement, ETH’s key momentum indicators, which were below their respective neutral lines at press time, did not indicate the possibility of that happening any time soon.
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Likewise, the coin’s Aroon Down Line (blue) was pegged at 100% at press time. This indicator is used to identify trend strength and potential trend reversal points in a crypto asset’s price movement.
When the Aroon Down line is close to 100, it indicates that the downtrend is strong and that the most recent low was reached relatively recently.
Source: ETH/USDT on TradingView