Ether (ETH) could see price volatility soon due to these metrics: CryptoQuant

During the week, ether (ETH) received a lot of attention from crypto investors as anticipation intensified over the approvals of its cash exchange-traded funds (ETFs).

While the crypto asset recovered significantly as the market awaited the US Securities and Exchange Commission’s (SEC) decision on ETFs, CryptoQuant analysts identified dynamics in the chain that could lead to high volatility soon.

Demand for ETH is increasing since the approval of the ETF

Earlier this week, ETH surged 25% in two days, surpassing $3,900, its highest level since mid-March. The rally came after market experts, led by Bloomberg ETF analysts, raised the odds that the SEC would approve the funds from 25% to 75%.

CryptoQuant revealed that ETH prices received upward pressure from perpetual futures market traders and permanent holders of the cryptocurrency.

Traders in the perpetual futures market “aggressively” opened long Ethereum positions in anticipation of higher prices as rumors of the ETF’s approval circulated. As a result, total open interest in the futures market increased to its highest level since January 2023, from 2.8 billion ETH to 3.2 billion ETH (11.7 billion dollars) in a few hours.

Traders gained more exposure to ETH than BTC, as seen in the Ethereum-Bitcoin open interest ratio, which went from 0.54 to 0.67. The surge revealed that ether’s total open interest was 67% of bitcoin, indicating that market participants preferred more exposure to ETH than the largest digital asset on the sidelines.

Additionally, buy orders dominating sell orders in the perpetual futures market added to the upward pressure on ETH prices, as seen in the bid-ask ratio above a .

Increased ETH exchange flows

In addition, demand for ETH gained strength, with permanent holders accumulating more than 100,000 ETH, their highest daily level since September 2023, in 24 hours. Similarly, the staked ETH amount was recovered. After falling to 32.4 million on May 20, the amount of ETH staked rose again to 32.5 million, signifying investor confidence in the cryptocurrency.

With demand for ETH rising, daily net flows of the asset on exchanges rose to 62,000, their highest level since early March. Most of the flows went to crypto exchanges Binance and Bybit. CryptoQuant said high exchange flows are historically associated with price volatility, as investors may want to sell their assets to take advantage of possible price increases after the ETF is approved.

Meanwhile, ETH was hovering around $3,700 at the time of writing, having gained 1% in the past 24 hours.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!