💥 $30B and Rising: ETH Open Interest Signals Massive Leverage Surge

In a recent X post, CryptoQuant community analyst Maartunn noted that Ethereum Open Interest has increased. The “Open Interest” indicator shows the total number of ETH derivatives positions on all centralized exchanges. It comprises long and short bets.

When the indicator rises, investors start additional positions. This tendency usually increases sector leverage, making prices more volatile.

However, the indicator moving down shows investors are either closing holdings themselves or being liquidated by their platform. This tendency generally stabilizes the asset by reducing leverage.

The Ethereum Open Interest graphic given by Maartunn illustrates the development over the past several years:

According to the graph above, Ethereum Open Interest has grown rapidly as the cryptocurrency's price has risen beyond $4,400. Speculation in the asset may have increased due to the run. This isn't unprecedented, but the sudden Open Interest surge may be noteworthy.

Overheated derivatives markets may cause wholesale liquidation when high-leverage traders lose their bets. These violent incidents upset asset prices.

Ethereum may be volatile again after the recent Open Interest hike brought holdings to a record $30 billion.

According to CoinGlass, large liquidations have happened in the recent 24 hours.

The accompanying heatmap shows that Ethereum, with $140 million in liquidations, has seen the most aggressive closures in the cryptocurrency market today.

with peaking at $771 million per day in July, profit-taking on the ETH network dropped, but it's heating up again with the recent rise, according to on-chain analytics company Glassnode in an X post.

Investor profit-taking has returned to $553 million a day, lower than before but still significant.

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