Key Points
- Ethereum’s price exceeds $3,600 as Ether futures open interest reaches a record high.
- Despite the price surge, experts warn against overleveraged positions and the vulnerability of retail traders.
The price of Ethereum has seen a significant surge, rising by 15% over the past week and reaching the $3,600 mark for the first time in five months.
Currently trading around $3,590, Ethereum’s 4.68% gain in the last 24 hours has sparked hopes for a potential altcoin rally.
Open Interest in Ether Futures
This upward trend coincides with a record-high in Ether futures open interest, which hit $22 billion on November 27, a 23% increase over the last month.
However, analysts advise caution, noting that high open interest, while indicative of growing activity, does not necessarily signal bullish sentiment, as derivatives markets encompass both long and short positions.
The leveraged environment poses risks, particularly for retail traders, often called “degens”, who are known to use leverage ratios as high as 20x.
A slight 5% daily price drop can trigger mass liquidations, wiping out margin deposits. Between November 23 and November 26, $163 million in long ETH futures positions were liquidated, underlining the risks of overleveraged positions.
Ethereum’s Performance and Institutional Interest
Ethereum’s monthly performance has also been noteworthy, with a 37% gain pushing its market capitalization to $431 billion, a 35% increase during the same period.
Ethereum’s positive momentum is further bolstered by the performance of Ether-based exchange-traded funds (ETFs). On a single day, Ether ETFs recorded $90.10 million in inflows, bringing cumulative net inflows to $240 million since their launch in late July.
This growing institutional participation marks a significant shift from the tepid start of Ether ETFs, indicating increased confidence in the cryptocurrency’s long-term prospects.
The question remains whether Ethereum’s surge could trigger a wider altcoin rally. Historically, altcoin seasons have followed Bitcoin bull markets, propelled by declining Bitcoin dominance and Ethereum’s robust performance.
In the past few days, major altcoins, including XRP and Solana (SOL), have seen a double-digit rally. However, according to CryptoQuant CEO Ki Young Ju, the true onset of an altcoin season would require a substantial influx of capital from retail traders, a factor that remains uncertain.
