Key Points
- Ethereum’s value has risen to a three-month high, surpassing $2,900, amid growing bullish sentiment.
- Increased speculative activity from derivative traders is indicated by rising estimated leverage ratios and funding rates.
Ethereum has reached a three-month peak, exceeding $2,900, as bullish sentiment strengthens.
The increase in the estimated leverage ratio and funding rates suggests a rise in speculative activity from derivative traders.
Details of Ethereum’s Performance
In just two days, Ethereum [ETH] has seen a 20% increase, with the price fluctuating between $2,400 and $2,950. Currently, ETH is trading at $2,922, its highest level in over three months.
Alongside the recent gains, there has been an increase in volatility. The estimated leverage ratio has notably spiked this week to a seven-day high.
Currently, this metric stands at 0.42, indicating that 42% of the open positions on the derivatives market are backed by leverage. An increase in leverage activity can cause price volatility to rise.
However, the estimated leverage ratio has not yet reached extreme levels, suggesting that Ethereum has the potential to continue its upward trend.
Funding Rates and Open Interest
The recent positions opened on the derivatives market appear to be longs, as evidenced by the increasing funding rates.
Rising funding rates indicate an influx of long positions. It also suggests that long traders are willing to pay a higher fee to maintain their positions, implying a bullish bias in the market.
At the same time, Ethereum’s open interest continues to rise, currently standing at a five-month high of $16.61 billion.
In the past two days, Ethereum’s open interest has increased by over $3 billion, further indicating high speculative interest in ETH.
The increase in trading activity and open positions in the derivatives market raises the probability of high volatility and potentially indicates that ETH could be approaching an overheated market.
However, technical indicators suggest that an ETH bull run could be in progress.
Ethereum is currently testing a crucial resistance at the 200-day Simple Moving Average (SMA) on its one-day chart. If ETH successfully flips this price level at $2,955, it could lead to a sustained uptrend.
Overcoming this resistance could also trigger a 12% rally to the 1.618 Fibonacci level ($3,260).
The Moving Average Convergence Divergence (MACD) metric has flipped positive and made a sharp move north, indicating that the uptrend is gaining strength.
However, traders should be cautious of signs of profit-taking as selling pressure could cause the price to drop and test support at $2,700. A drop below this support could trigger a downtrend.
ETH ETFs and the Rally
On November 7th, the total inflows to spot Ethereum exchange-traded funds (ETFs) reached $79.74 million, their highest level since August.
The Fidelity Ethereum Fund (FETH) ETF had the highest inflows of $28 million, followed by the BlackRock iShares Ethereum Trust with $23 million inflows.
The VanEck Ethereum Trust also recorded $12 million inflows, marking its first inflows in two weeks.
If the demand for ETH ETFs continues, it could be a positive sign for Ethereum’s price.
