Welcome to Extreme Investor Network, where we provide you with unique and valuable insights into the world of trading, the stock market, and Wall Street. Today, we are diving into the relationship between Ethereum Price and ETH Open Interest.
As of June 9, ETH open interest saw a decline from $16.97 billion to $16.35 billion, reflecting a $620 million decrease. Interestingly, this decline in open interest was only half of the 7.38% dip in ETH price from its weekly high on June 6.
When open interest decreases slower than price during a market downturn, it could signal a bullish recovery for two key reasons.
Firstly, a smaller drop in open interest compared to the price decline indicates that a significant number of LONG contract holders chose to hold onto their positions during the market crash. This demonstrates investor confidence in the asset’s potential for recovery.
Moreover, if ETH price continues to rebound and rises above 2.5% in the coming days, bearish positions may be forced to cover their SHORT contracts through rapid purchases, potentially triggering a short squeeze and propelling the price upwards.
In summary, the disparity between Ethereum price and open interest decline can be viewed as a positive indicator, suggesting underlying strength and the possibility of a bullish rebound in the near future.
Looking ahead, despite the market crash, speculative traders held onto their $16 billion futures contracts, leading to a 2.5% rebound in Ethereum price to reclaim the $3,700 level on June 9. With the ETH ETF listing on the horizon, additional buying pressure could drive Ethereum price higher as strategic traders anticipate major inflows.
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