Over the course of just 48 hours, Ethereum [ETH] has experienced a remarkable 20% surge, with its price hovering between the range of $2,400 and $2,950. Currently, ETH is valued at $2,922, representing its peak value in more than three months.
This recent upswing in price has been accompanied by an uptick in volatility. Notably, the calculated leverage ratio has witnessed a sharp increase this week, reaching a seven-day high.
As of now, this ratio stands at 0.42, indicating that 42% of open positions in the derivatives market are leveraged. The accumulation of leveraged positions typically amplifies price volatility.
Despite the surge in the leverage ratio, it has not hit extreme levels yet, suggesting that Ethereum still has room to continue its upward trajectory.
Heightened Funding Rates & Increased Open Interest Reach Multi-Month Highs
The surge in newly established positions in the derivatives market appears to be predominantly long positions. This is evidenced by the rising funding rates, which have soared to a three-month peak.
An increase in funding rates indicates an influx of long positions and suggests that long traders are willing to pay a higher premium to hold their positions, indicating a prevailing bullish sentiment in the market.
In parallel, Ethereum’s open interest continues to climb and currently sits at a five-month high of $16.61 billion according to Coinglass data.
Within the past two days, Ethereum’s open interest has surged by more than $3 billion, underscoring the high speculative interest in ETH.
The surge in trading activity and open positions in derivatives markets heightens the potential for increased volatility and hints at a potentially overheated market for ETH.
Nevertheless, technical indicators suggest that Ethereum may be embarking on a bullish trend.
Testing Resistance at 200-Day Moving Average
Presently, Ethereum is challenging a critical resistance level at the 200-day Simple Moving Average (SMA) on its daily chart. If ETH successfully breaches this level at $2,955, it could pave the way for a sustained uptrend.
A breakthrough at this resistance level might also trigger a 12% upsurge towards the 1.618 Fibonacci level ($3,260).
The Moving Average Convergence Divergence (MACD) indicator signals further potential gains ahead. With a positive flip and a notable uptick, the trend appears to be gaining momentum.
However, traders should be vigilant for signs of profit-taking, as selling pressure could force the price to retest support at $2,700. A breach below this level could usher in a downtrend.
Is the Surge Driven by Inflows to Ethereum ETFs?
Recent data reveals that on November 7th, total inflows to Ethereum spot exchange-traded funds (ETFs) surged to $79.74 million, marking the highest level since August, as reported by SoSoValue.
The Fidelity Ethereum Fund (FETH) ETF recorded the most significant inflows at $28 million, followed by the BlackRock iShares Ethereum Trust with $23 million inflows.
Additionally, the VanEck Ethereum Trust registered $12 million in inflows, marking its first influx in a fortnight.
If the demand for ETH ETFs continues to rise, it could have a positive impact on Ethereum’s price movements.