Ethereum Speculators Invest $654M In Bets Amid Price Drop to $2,800

Ethereum's price has recently seen a significant drop, falling to the low $2,800 range. Despite this downturn, the Open Interest for Ethereum has surged, indicating speculation is still strong in the market.

Key Takeaways

Ethereum's price declined by over 5% in the last 24 hours, reaching the low $2,800 levels.
A significant wave of liquidations occurred, totaling $158 million, primarily from long positions.
Despite the price drop, Ethereum's Open Interest rose by 4.3%, increasing by $654 million.
A high Open Interest could indicate potential future volatility due to increased leverage in the market.

Ethereum

Ethereum's Recent Price Drop

The cryptocurrency market has experienced a downturn as the new month began, with Bitcoin and Ethereum both falling more than 5% over the past 24 hours. Ethereum (ETH) is currently trading in the low $2,800 range, effectively erasing much of the recovery it made at the end of November.

Ethereum Price Chart
Ethereum price trend over the past five days | Source: ETHUSDT on TradingView

This sudden decline in Ethereum's price triggered a significant number of liquidations across derivatives exchanges, with $158 million in Ethereum-related contracts being liquidated. Of this total, $140 million came from long positions specifically.

Ethereum Liquidations
Latest cryptocurrency market liquidations | Source: CoinGlass

Interestingly, despite the notable liquidations observed, derivatives investors have not lost their zeal.

Increased Open Interest Following the Dip

According to a post by CryptoQuant analyst Maartunn, Ethereum's Open Interest has seen a substantial increase following the recent price dip. The term “Open Interest” refers to the total number of open positions related to ETH across all centralized derivatives platforms.

Ethereum Open Interest
Trend of Ethereum's Open Interest over the past few days | Source: @JA_Maartun on X

The chart shared by Maartunn illustrates that the Ethereum Open Interest initially dropped along with the price decrease, as many long positions were forcibly closed. However, as the bearish pressure eased and the price settled sideways, interest in new positions began to rise again.

Since this decline, Open Interest has increased by approximately $654 million, marking a 4.3% rise. Analyst Maartunn remarked, “Looks like the gamblers are back for another round.”

Historically, a surge in Open Interest can lead to increased volatility in cryptocurrency markets because it indicates a high level of leverage. When many positions are open, any significant price movement can create a chain reaction of liquidations, further intensifying the price trends.

An example of this effect was evident over the past day. With Open Interest climbing again, it remains uncertain whether this will result in more price volatility going forward.