Ethereum Open Interest Nears All-Time Highs Ahead Of Merge

Ethereum

Data shows the Ethereum open interest has surged up to near all-time high values as the ETH 2.0 merge comes closer.

Ethereum Open Interest Has Sharply Risen Up Recently

As per the latest weekly report from Arcane Research, the ETH open interest in futures and perps has surged up to 4.2 million ETH in recent days.

The “open interest” is an indicator that measures the total amount of Ethereum futures and perps contracts currently open in the market (denominated in ETH). The metric includes both shorts and longs.

When the value of this indicator is high, it means a large number of contracts are currently open in the market. Such values usually lead to higher volatility in the price of the crypto.

On the other hand, low values of the metric suggest many contracts have been closed on the market. This can result in lesser volatility for the coin.

Now, here is a chart that shows the trend in the Ethereum futures and perps open interest over the past year:

The value of the metric seems to have moved up recently | Source: Arcane Research's The Weekly Update - Week 31, 2022

As you can see in the above graph, the Ethereum open interest has observed uptrend in the past week and is now near the all-time high value.

The current value is the 2nd highest ever recorded for the indicator, just below the 4.21 million ATH set back on July 14th of this year.

While the massive hedging amid arbitrage opportunities like Celsius’ bankruptcy was behind the last peak, the report notes that the current rise is likely caused by trading strategies ahead of the 2.0 merge.

The ETH futures market is also observing massive discounts at the moment. Normally, high open interest and negative basis like right now lend for the possibility of a short squeeze (an event where short liquidations cascade together due to a sudden swing in price).

But Arcane Research points out that the latest increase in leverage is likely from more conservative risk management, which would mean that any possible short squeeze that might take place currently won’t be too significant.

ETH Price

At the time of writing, Ethereum’s price floats around $1.7k, down 1% in the past week. Over the last month, the crypto has gained 40% in value.

The below chart shows the trend in the price of the coin over the past five days.

Looks like the value of the crypto has come down during the last two days | Source: ETHUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research