Key Points
- Ethereum briefly surpassed $4000, but a potential short-term pullback is expected due to the coin’s overheated Futures market.
- There has been a noticeable increase in validator exits from Ethereum’s Proof-of-Stake network in recent weeks.
Ethereum’s Recent High and Expected Pullback
On March 8th, the prominent altcoin Ethereum briefly traded at a three-year high above $4000.
However, a short-term decline may be imminent due to the coin’s overheated Futures market, which often signals a sharp drop in value.
According to Coinglass data, Ethereum’s Futures Open Interest has surpassed $13 billion, reaching its highest level since November 2021.
Historically, such a surge in Futures contracts leads to an unsustainable inflation of the coin’s price, followed by a significant crash.
Validator Exits and Market Volatility
The recent hike in Ethereum’s value has also led to an increase in positive Funding Rates across crypto exchanges.
This, combined with the rising Open Interest, increases the risk of severe long liquidations, potentially causing high market volatility and unpredictable price swings.
Furthermore, there has been a recent increase in validators voluntarily exiting from Ethereum’s Proof-of-Stake network.
This is likely due to the new yearly highs in Ethereum’s price and the desire of validators to profit from them.
Glassnode data reveals a 42% increase in the number of validators leaving the Ethereum network over the last two weeks.
This has resulted in a slight decrease in the network’s participation rate, which currently stands at a two-week low of 99.46%.
At this time, there are 999,660 active validators on the Ethereum network, each staking over 32 Ethereum in the network’s 2.0 contract.
