Ethereum “Open Interest” Pullbacks to $11.5B, Overheated Markets Cool Off

• Ethereum’s OI drops to $11.5B, indicating a market cooldown.
• $400M of Ethereum positions liquidated since June 5.
• SEC closes ETH 2.0 probe, Pantera Capital eyes $100M buy, showing institutional interest.

Ethereum, the second-largest cryptocurrency, is experiencing a decline in trader interest, as indicated by a dip in open interest (OI). This pullback in OI, after reaching its peak, suggests that the market is cooling down. According to CryptoQuant’s data , Ethereum’s OI has fallen from $13 billion to $11.5 billion, signaling a decrease in market activity. 

Open interest represents the total value of outstanding derivative contracts (long and short positions) in the market. A higher OI typically suggests a more active market with increased trading activity and potential volatility. Ethereum’s OI reached an all-time high of about $9.5 billion during the previous bull run when the price peaked at $4,891 in 2021.

Despite not surpassing this performance in the current cycle, the leading altcoin saw its OI climb to $13 billion, setting a new record. This led to an overheated market for Ethereum.

Following the opening of a large number of leveraged positions, a wave of liquidations occurred. Since June 5, 2024, approximately $400 million worth of Ethereum positions have been liquidated. Out of that, $285 million in liquidations were long positions, and $113 million were short positions.

After this significant surge in OI, a sharp correction followed, with OI retreating by $1.5 billion to $11.5 billion. Whether this pullback in OI is sufficient to impact the token’s price will ultimately be determined by market makers, but it appears that the market has cooled down somewhat.

Meanwhile, Ethereum remained in focus after the SEC officially closed its investigation into ETH 2.0. This marked a significant win for ETH developers, technology providers, and industry participants who were impacted by the regulatory crackdown and the costly litigations that followed. Additionally, Pantera Capital’s ambitious plan to purchase $100 million worth of Ethereum underscores the burgeoning institutional interest in the second-largest altcoin.