Recent market data indicates that Ethereum (ETH) open interest has plunged to its lowest level in three years, reflecting a significant reduction in speculative activity within the derivatives market. Open interest represents the total number of outstanding futures and options contracts that have not yet been settled. This decline suggests that traders are aggressively deleveraging or moving toward spot markets amid shifting macroeconomic conditions and regulatory uncertainty. Historically, a sharp drop in open interest can act as a double-edged sword for the price of Ether. On one hand, it indicates a ‘flush out’ of excessive leverage, which often precedes price stabilization or a potential market bottom. On the other hand, reduced liquidity in the derivatives space can lead to increased volatility if large spot trades occur unexpectedly. Currently, the three-year low suggests a lack of immediate directional conviction among both institutional and retail traders. While this cautious sentiment may keep ETH in a consolidation phase in the short term, the removal of speculative ‘bloat’ provides a healthier foundation for a more sustainable price recovery once new bullish catalysts emerge.
Source: ETH open interest falls to 3-year low: What does it mean for Ether price?
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