Ethereum Touches $2,600 as On-chain Metrics Reveal Its Price Decline May End Soon
Ethereum has struggled to recover since slipping off the $3000 threshold in early August. However, vital on-chain metrics suggest the downturn might be nearing its end.
According to a CryptoQuant report, Open Interest (OI) in Ethereum has increased, and the taker buy-sell ratio has turned positive, suggesting buyers are regaining momentum.
Based on this report, CryptoQuant's analyst Burak Kesmeci believes Ether will rebound soon.
Buyers Returning to EthereumAn August 19 CryptoQuant insights report by Burak Kesmeci revealed that Ether's taker buy-sell ratio is positive again.
Notably, the taker buy-sell ratio is a metric that measures the ratio of buyers to sellers across major cryptocurrency exchanges. This metric turning positive is a bullish signal because a positive taker buy-sell ratio indicates that traders buying Ethereum have exceeded sellers on exchanges.
Moreover, CoinGlass data reveals that the larger 24-hour timeframe shows slight dominance of Ether sellers. However, the 12-hour timeframe is positive, with long or buy trades accounting for approximately 50.37% of trading positions.
According to Kesmeci, current market data reveals that Ether buyers are gradually recovering.
Increase in Ether OI Could Signal Price Recovery2 Different On-Chain Metrics May Indicate We Are in the Late Stages of Ether's Correction
Current data shows that buyers in Ether are gradually regaining strength. However, time will tell whether this is a temporary rebound or the start of a strong rally led by the bulls." - by... pic.twitter.com/hrzhSLqdB4
- CryptoQuant.com (@cryptoquant_com) August 19, 2024
Kesmeci also pointed out that Ether OI, which represents all open positions (long and short) at a given time, has surged. On August 19, Ether OI rose to $10.69 billion, an approximately 10% increase from its August 18 value.
Kesmeci noted that in June 2024, when ETH traded at $3,800, the OI data surpassed $13 billion, similar to the levels recorded in March.
On March 12, Ether attained a year-to-date ATH of $4,066, with Open Interest soaring to $13.67 billion before declining after a significant pullback. However, when ETH rallied to $3,800 in June, O1 soared again, reaching $15 billion before declining to $7 billion.
Given the recent increase in OI, Kesmeci believes traders might have started opening new positions in anticipation of future price spikes.
According to the analyst, leveraged traders must return to the market for prices to surge significantly. Historically, future traders gain more confidence in opening trading positions when an asset's price increases.
Many traders opened new positions in June, anticipating a significant rally once the spot Ether ETFs debuted in the US. This could be the reason for the high OI recorded in June.
However, since their launch on July 23, the spot ETH ETFs have not significantly bolstered Ethereum price. Instead, they recorded approximately $434 million in net outflows.
These substantial withdrawals must have depressed investor confidence, leading to Ether's price bearish outlook since the ETF launch.
ETH trades at $2,665, with a 2% increase in the past 24 hours. However, ETH has lost 23.6% of its price gains in the past 30 days, confirming sellers' pressure.
However, with Open Interest on the rise, Ether could be on its way to recovery. According to the CryptoQuant author, only time will reveal if ETH is set for a temporary recovery or to begin a major rally.
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