The cryptocurrency market kicked off the new month with notable declines, as both Ethereum and Bitcoin fell over 5% in just 24 hours. Ethereum has returned to the low $2,800 range, effectively reversing the gains it made in the last week of November. This abrupt price drop has triggered significant liquidations on derivatives exchanges, amounting to $158 million in Ethereum contracts, with long positions accounting for $140 million of that total.
Despite the wave of liquidations, derivatives traders appear undeterred. Data from CryptoQuant analyst Maartunn indicates that the Open Interest for Ethereum has surged by more than 4% following the price decline. Open Interest measures the total number of outstanding positions on centralized derivatives platforms.
Initially, the Ethereum Open Interest plummeted in tandem with the price drop as long positions faced forceful liquidations. However, as the bearish momentum subsided and the price stabilized, the Open Interest began to recover, suggesting that speculators are once again entering the market. Since the price dip, the Ethereum Open Interest has increased by approximately $654 million, marking a rise of 4.3%.
Maartunn commented, “Looks like the gamblers are back for another round,” highlighting that historically elevated Open Interest values often lead to increased market volatility. The presence of high leverage can amplify price swings, potentially resulting in further liquidations that exacerbate the initial price movements. Such a pattern was evident in the previous day”s trading.
As the Ethereum Open Interest continues to rise, market participants are keenly observing whether this trend will lead to heightened volatility in the near future.
