In a recent revelation by on-chain analytics company Glassnode, the Ethereum futures market continues to be in an overheated state, irrespective of a significant long squeeze that recently took place.
The latest post by Glassnode sheds light on the changing dynamics of the Ethereum futures market in the past day. Ethereum, alike other digital currencies, has experienced substantial volatility within this period. The intense price fluctuation often spells turmoil for the derivatives sector, invariably leading to a pile-up of liquidations across different exchanges.
As Ethereum has primarily seen a downward trend in its price action, long investors have been majorly impacted. Glassnode shared a chart showcasing the trend in long liquidations involving Ethereum throughout the past year.
The chart indicates that the Ethereum futures market has just experienced a significant amount of long liquidations. As per Glassnode, “Yesterday, $76.4M in ETH long liquidations hit the market, with $55.8M wiped out in a single hour – the second-largest spike in a year, just behind Dec 9’s $56M.”
These liquidations have resulted in a significant ETH leverage flush-out on derivatives platforms. Another chart was shared, this time for the Open Interest, which demonstrates the market deleveraging:
“Open Interest” is a metric that monitors the total Ethereum-related futures positions open across all centralized derivatives exchanges. This metric sat around $20.5 billion at the beginning of the month but dropped to $15.9 billion following the mass liquidation event. This indicates that positions worth $4.6 billion have been removed from the market.
While this is a substantial reduction, it hasn’t notably cooled down the Open Interest. The 365-day moving average (MA) of Ethereum’s Open Interest currently stands at $13 billion, making the daily value approximately 22% higher than last year’s average.
This could signal that the sector’s leverage remains high, despite the significant liquidations suffered by long investors. Historically, a hyperactive futures market has typically unwound with price volatility for the coin, suggesting that Ethereum could face more sharp fluctuations soon.
Ethereum’s price plummeted to the $2,100 mark yesterday but seems to have rebounded and is now trading around $2,800.
