Ethereum, the second biggest cryptocurrency, has been going through a rough patch lately. But could things be changing?
Signs of a Bullish Turn
An analyst from CryptoQuant believes that Ethereum might be nearing the end of its slump. They’ve been looking at some important on-chain metrics that suggest a potential bullish turn.
What are On-Chain Metrics?
These metrics are like clues that give us insights into how people are buying and selling Ethereum. They can help us understand the market sentiment and predict potential price movements.
Two Key Metrics
The analyst highlights two key metrics:
- Taker Buy Sell Ratio: This tells us how many people are buying versus selling Ethereum. A positive ratio means more people are buying, which could signal increasing demand and a potential price rise. The analyst noticed that this ratio has recently turned positive for Ethereum, indicating that buyers are starting to gain control.
- Open Interest (OI):
This metric shows the total number of open positions in the market. High OI often means a big price move is coming, as traders are heavily invested in the market’s direction. The analyst points out that OI reached a record high in June 2024 when Ethereum hit $3,800. This suggested a correction was likely, and it happened. The recent drop in OI, combined with the liquidation of leveraged positions, suggests that the market might be stabilizing.
What Does This Mean for Ethereum?
The analyst believes that for Ethereum’s price to move significantly, leveraged players (those who borrow money to trade) will need to re-enter the market. This would drive demand and push prices higher.
While the data shows buyers are gaining strength, it’s still too early to say whether this is a temporary rebound or the start of a sustained rally.
