Significant Drop in Ethereum Value: Binance Open Interest Figures Suggest Swift Rebound
In recent developments, Ethereum, the second-largest cryptocurrency by market capitalisation, has experienced a correction, yet still maintains a strong position. Over the past month, Ethereum has gained nearly 4%, with a yearly growth of 96%. Despite this correction, Ethereum is holding comfortably above its September low of $4,307 and sits only 9.3% below its all-time high reached on August 24.
This cooling of leveraged positions is not necessarily a bearish omen, but rather a needed market cleanse. Tom Lee, Chairman of BitMine, a researcher who has expressed speculation about Ethereum's price, claims that while ETH's spot price might see slightly more downside, the market is likely in the process of establishing a low, setting the stage for its next upward move.
Open interest (OI) for Ethereum has dropped more than 8% in the past week, a trend that has often preceded spot price corrections in the past three months. According to crypto researcher Burak Kesmeci, drops in Binance's open interest have frequently preceded local bottoms for Ethereum. Kesmeci suggests that the OI may need to ease down to about 9.69 billion to signal a full reset.
Ethereum staking deposits have risen to a record 36.2 million ETH, indicating a strong commitment from investors. The current trend also suggests that investors are reluctant to sell Ethereum. U.S. spot ETFs now own 6.7 million ETH, almost double the amount from April.
However, the information provided by CryptoQuant suggests a divergence in fundamental perspectives regarding Ethereum's future price. While Tom Lee forecasts a price range of $7,500 to $15,000 for ETH by the end of 2025 and expects a supercycle lasting 10 to 15 years that could multiply ETH's price up to 100 times, Citigroup has set a year-end 2025 price objective of $4,300 for Ethereum. Citigroup's cautious position accounts for macroeconomic risks and potential regulatory challenges.
Ethereum's current correction phase followed a high of about $4,950 in late August. Kesmeci provided three examples of OI drops preceding spot price corrections: an 10.52% drop on August 17, a 25.38% crash on August 20, and an 8.69% decrease on September 13.
In conclusion, while Ethereum is currently experiencing a correction, the market indicators suggest that it might be preparing for the next leg of the rally. However, it's essential to consider the differing perspectives on Ethereum's future price, with Tom Lee predicting a significant upward movement and Citigroup projecting a more conservative growth.
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