Ethereum Open Interest & Leverage Ratio Have Both Spiked Recently

Data shows the Ethereum derivatives-related metrics have shot up recently, a sign that the price is at risk of going through a volatile storm.

The price of Ethereum (CRYPTO: ETH) is showing no signs of slowing down and might be setting itself up for a price storm based on the latest derivatives data.

What Happened: According to a CryptoQuant analysis, two key derivatives indicators are suggesting the price of ETH may be at risk of a volatile price move.

The first indicator is the Open Interest, which measures the total number of ETH-related contracts currently open on all derivatives platforms. The metric takes into account both long and short positions.

An increase in the Open Interest indicates investors are opening fresh positions in the market, while a decrease suggests positions are being closed either voluntarily by investors or through exchange liquidations.

The second indicator is the Estimated Leverage Ratio, which measures the ratio between the Open Interest and the Derivatives Exchange Reserve.

The Derivatives Exchange Reserve is the total amount of ETH sitting in wallets associated with all centralized derivatives exchanges.

The Estimated Leverage Ratio tells us the amount of leverage or loan that the average derivatives user in the Ethereum market is currently taking.

According to the analysis, the Open Interest has surged to a new all-time high of over $13 billion. Over the last four months, the indicator has increased by over 40%.

“This reading suggests an explosion in speculative interest around Ethereum,” the analysis said.

However, the Estimated Leverage Ratio is also showing a strong increase, which may not be a healthy development.

“The Estimated Leverage Ratio metric is also spiking, which doesn't bode well for ETH. This metric shows the amount of leverage being used by the average derivatives user in the Ethereum market,” the analysis said.

The chart below shows the Estimated Leverage Ratio, which is also at an all-time high.

Related Link: Ethereum Open Interest Surges Past Previous ATH, Setting A New All-Time High Above $13 Billion

ETH Price Action: At last check Monday, ETH was trading around $3,000, down nearly 7% for the week.