With investor demand seemingly on the rise, Ethereum’s price looked set to surpass the psychological $3,000 level over the past week. However, that dream hit a major roadblock after geopolitical tensions quickly escalated late Thursday, June 13.
It didn’t take long for Israel’s airstrike on Iran to impact global financial markets, with cryptocurrency prices coming under fresh pressure. Ethereum, the second-largest cryptocurrency by market capitalization, has lost about 6% of its value over the past 24 hours.
Is Capital Flowing Out of ETH to BTC?
In a Quicktake post on the CryptoQuant platform, on-chain analyst Amr Taha shared new insights into the recent wave of volatility that has hit the crypto market. The crypto expert noted that Ethereum and Bitcoin were particularly affected by recent global developments.
First, Taha noted a drop in Ethereum Open Interest (OI) on Binance, the world’s largest cryptocurrency exchange by trading volume. Data from CryptoQuant shows that ETH OI has dropped significantly by 19% over the past 24 hours, coinciding with the price drop.
The Open Interest indicator estimates the total amount of money flowing into derivatives of a particular cryptocurrency at any given time. A falling OI value is often seen as a bearish signal, as it indicates a decline in investor confidence and positive sentiment.
According to Taha, this latest sudden drop in Ethereum Open Interest points to a wave of panic selling, with investors instinctively exiting their long positions. “Traders may have rushed to close their long positions, either manually in fear of deeper losses or automatically through forced liquidations when stop-loss orders were hit,” the analyst said.
Taha drew a parallel between falling Ethereum Open Interest and Bitcoin outflows from Coinbase, the largest centralized exchange in the United States. CryptoQuant data shows that 7,000 BTC were withdrawn from the trading platform over the past day.
According to Taha, this significant Bitcoin inflow, which coincides exactly with the decline in Ethereum OI, suggests new buying and that large investors may be repositioning their strategies to accumulate. This trend may not be particularly positive for ETH, as it suggests that capital may be returning to the leading cryptocurrency.
