Can derivatives traders help Ether break the ATH?

So far, October has been a pretty hot month for Ethereum. Strictly speaking, it has hit higher price highs. Even so, Ether failed to break the May high of $ 4,400.

In fact, the last few days have been pretty boring. After gaining 2.5% for the day, ether is trading at $ 4,142 at press time.

Ether price chart | Source: TradingView

Bet on risk

At the moment, traders are taking a lot of risk in the futures market. Aggregate leverage hovered around recent local highs. It will display one of the following:

Traders are very confident that the price of Ether will go up or they are less greedy and just want to make a profit at this point. Whenever this ratio peaked in the past, the Ethereum price reacted differently.

The current level of 0.13 was observed in early September and the price of ether rose quite sharply back then. However, a slight downward deviation in price led to mass liquidations and caused prices to fall.

However, in July, when leverage was so high, the price of ether was at a local high. Then when prices go up, traders still return to the market, but cautiously. In fact, the lever is slowly running out.

Source: CryptoQuant

Which scenario could happen?

A look at the current state of the derivatives market will help to draw reasonable conclusions about where ether is headed. The Open Interest Index (OI) has risen quite significantly recently and shows that traders are interested in the futures market.

As can be seen from the attached chart below, the open interest is on ATH, which means more capital than ever is being diverted into the Ethereum market – which is a pretty good sign.

However, if you look closely at the graph, you can see that the price of Ethereum begins to fall after periods of peak opening times. Therefore, even if Ether recovers in the upcoming trading sessions, the chances are quite high that it will undergo a significant correction.

Source: ByBt

In addition, the amount of ether liquidated over a period of 4 hours is quite small. As long as there is no mass liquidation, there will likely be a significant correction. However, if the bullish sentiment subsides, a similar scenario to September will play out.

The trading volume of ethers has gradually increased in the spot market. Into The Block (ITB) points out that the number of purchases has significantly exceeded the number of sales transactions. In the last 12 hours alone, for example, there were more purchases than sales, over 4,000 ethers.

In addition, the flow of ether on the exchanges has recently started to turn negative, indicating a propensity to buy. Market participants buying at this stage show that they are desperately hoping for Ethereum price to break the previous high.

Therefore, if the same dynamic continues, the Ether price is likely to rise higher in the coming trading sessions. However, if the bears and short traders gain control, the price will likely go through a corrective phase before moving higher.

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