Buoyed By DeFi Sector, Ethereum Hits 2-Year High
Earlier today, Ether (ETH), the native crypto of Ethereum blockchain, rallied to a two-year high of $445, while open interest of Ethereum futures contract hit a record high, signaling that the uptrend will continue.
In spite of the two-year high price of $445, open interest on ETH futures remains almost stable at a fresh historical high of $1.50 billion.
The historically high open interest on ETH futures signals that traders are upbeat about the prospects of continuation of the ongoing rally.
In the past few months, Ethereum has been buoyed by Decentralized Finance sector. A rise in demand for Ether sparked an increase in gas fee, leading to additional demand for Ether.
Four days back, Santiment highlighted the record high Ether fees in terms of both the US dollar and ETH. As users have to buy ETH to settle miners’ fee, it could have fueled the rally. Analysts at Santiment wrote as follows:
1) On Tuesday, #Ethereum fees reached all-time high values in both $USD and $ETH. Since this record breaking statistic was hit, the #2 ranked market cap #crypto asset has risen +13% and sentiment has remained positive. This is an indication that although traders obviously prefer pic.twitter.com/cI6o8Rdn9b
— Santiment (@santimentfeed) August 14, 2020
Following the breakout of Ether above the two-year range, traders believe that further upside is in store. A popular trader named “Satoshi Flipper” has pointed out that Ether does not have any major resistance until $780. He said:
2 years $ETH spent in that range and we finally broke out
No hard resistance until $780. This run has literally just started 🚀 pic.twitter.com/alMvDrxMAK
— Satoshi Flipper (@SatoshiFlipper) August 14, 2020
Another trader nicknamed “Byzantine General” stated that the open interest in Ethereum is still “huge.” He opined that traders might by looking for a huge surge in price. He stated:
$ETH open interest is still absolutely massive.
So that means… That…
We haven’t even seen “the” big move yet? O_O pic.twitter.com/FnuBgmG3l3
— Byzantine General (@ByzGeneral) August 14, 2020
Usually, when a crypto token undergoes a price rally, the open interest declines as sudden jumps in price sparks short covering and profit booking of long positions. It is usually followed by a period of consolidation.
Nevertheless, in case of Ether, the open interest has surged to more than $1.50 billion, as per data from Skew. Roughly $761 million worth ETH futures contracts remain open in Huobi and OKEx exchange itself.
Supported by multiple criteria, including DeFi, adoption by institutions and overall bullish sentiment in the market, Ether has rallied 235% so far this year. The Cryptowatch team stated:
“Ethereum breaks up to a new 2-year high of $444. ETH is up 87% in the last 25-days, nearly 400% since its March low and 235% year-to-date.”
In the weeks ahead, traders anticipate the altcoin to test more resistance levels, specifically if the Ethereum blockchain witnesses brisk user activity due to bullish sentiment created by ETH 2.0.