Ether (Eth) price drops 6% between March 19 and March 21 after failing to break the $ 2,050 level of resistance. More noticeable, ETH has dropped 28% since Feb. 21, underperforming the broader crypto market, which refused 14% at the same time.
Despite the struggles of the ETH price, the Ether Futures Open Interest struck a record high on March 21. This led to entrepreneurs to ask if big investors positioned for a potential rally to $ 2,400 while also raising concerns about the risks of cascading liquidations due to increased leverage.
Ether futures combined -with open interest, eth. Source: Coinglass
Combined -with -an open interest in Ether Futures rose 15% in two weeks, hitting a record of 10.23 million ETH on March 21. Binance, gate.io, and bitget collectively ruled at 51% of the market, while the Chicago Mercantile Exchange (CME) holds 9% of ETH open interest, according to coinglass data. This is in contrast to Bitcoin futures, where the CME leads to a 24% part of the market.
Demand for Leveraged Eth Longs has refused
Increasing activity with ETH futures contracts usually indicates the interest of institutional investors, as open interest measures demand for seizure. However, buyers (longs) and sellers (shorts) are always corresponding, so an increase of open interest does not indicate a positive outlook.
To measure if consumers are looking for more action, analysts must compare the futures of ETH monthly contract prices to see exchange rates. In neutral markets, these derivatives Usually trading 5% to 10% higher on an annual basis to account for extended periods of regulating. If the merchants were bearish, this premium would probably drop below that range.
Ether futures 2-month annual premium. Source: Laevitas
The annual premium for ETH’s monthly futures dropped below 4% on March 21, down from 5% two weeks before. Refusing premium futures suggest reduced incentives for entrepreneurs to use “Cash and carry“Strategy, which involves selling contracts with futures while simultaneously buying ETH spot to get the premium as a fixed income.
Spot ETF Outflows and reduced ETH price pressure network fees
Part of Ether’s refusal comes from weak demand for funds exchanged by ether based in US (ETF), which has seen $ 307 million in net outflows within two weeks ending on March 20. The macroeconomic environment licks investor trust, as economists warn of increasing increased increasing increased increasing increase backwards Dangers due to global tariff wars, inflationary pressures, and a reduction in US government spending, according to the Boston Globe.
However, some analysts argue that the recent weakness of Ether’s price comes from an imbalance between network fees – required to be paid Validator-and the interests of decentralized applications (DAPPS) and layer-2 scaling solutions. This criticism is perfectly summarized by Martin Köppelmann, co-founder of GNosis.
Source: Koeppelmann
In a sense, the successful transfer of Ethereum to proof-stake and the introduction of Blob space to enhance scalability through rollups-while significant strengthening network capabilities-are also seen as factors that limit Ether price growth. Despite its low transaction cost Layer-2 solutionsSome ethical investors believe they are not rewarded enough.
Ether’s price faces pressure from increasing macroeconomic risks, while demand for DAPPs continues to decline – due to increasing competition or avoiding investor interests. The 7-day base layer of Ethereum fell to $ 605,000 on March 17, a sharp fall from just $ 2.5 million two weeks before.
There is no indication that the promotion of eth futures open interest is driven by bullish positioning. On the contrary, the demand for leveraged long position remains weak, suggesting careful feelings in the market.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
