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With investor demand seemingly on the rise, the Ethereum price looked set to cross the psychological $3,000 level over the past week. However, this dream hit a major stumbling block after geopolitical tensions quickly escalated in the late hours of Thursday, June 13.
It didn’t take much time for Israel’s airstrike against Iran to impact the global financial markets, with crypto prices succumbing to a fresh wave of downward pressure. Specifically, Ethereum, the second-largest cryptocurrency by market cap, has lost about 6% of its value in the past 24 hours.
In a Quicktake post on the CryptoQuant platform, on-chain analyst Amr Taha shared fresh insights into the wave of volatility that recently hit the cryptocurrency market. The crypto pundit noted that Ethereum and Bitcoin were particularly impacted by the recent global happenings.
Firstly, Taha noted the decline in the Ethereum Open Interest (OI) on Binance, the world’s largest cryptocurrency exchange by trading volume. Data from CryptoQuant shows that the ETH OI metric experienced a significant 19% dip in the past 24 hours, coinciding with a decrease in price.
The Open Interest indicator estimates the total amount of money flowing into derivatives of a specific cryptocurrency at any given time. A falling OI value is often considered a bearish signal, as it suggests a decline in investor confidence and positive sentiment.
According to Taha, this latest abrupt decline in the Ethereum Open Interest points to a wave of panic-induced selling, with investors instinctively exiting their long positions. “Traders likely rushed to close their long positions, either manually in fear of deeper losses or automatically via forced liquidations as stop-loss triggers were hit,” the analyst said.
Taha drew a parallel relationship between the falling Ethereum Open Interest and the flow of Bitcoin out of Coinbase, the largest centralized exchange in the United States. CryptoQuant data shows a significant withdrawal of 7,000 BTC from the trading platform in the past day.
According to Taha, this substantial exchange outflow of Bitcoin, coinciding precisely with the Ethereum OI decline, suggests fresh buying and that large investors may be strategically repositioning for accumulation. This trend might not be particularly positive for ETH, as it shows that capital might be rotating back into the premier cryptocurrency.
As of this writing, the price of ETH stands at around $2,546, reflecting an almost 4% decline in the past 24 hours.
