The price of ether (ETH) dropped by 6% between March 19 to March 21 after it did not break the resistance level of USD 2,050. More precisely, ETH fell by 28% since February 21, worse in the scope of a wider cryptocurrency market, which fell by 14% at the same time.

Despite the ETH price fights, the interest rate on the term in Ether Futures reached a record level of March 21. This led traders to the question of whether immense investors position a potential rally towards 2400 USD, while raising concerns about the risk of cascading liquidation due to an increased lever.

The total open interest rates in Ether Futures increased by 15% in two weeks, reaching a record 10.23 million ETH on March 21. Binance, Gate.io and Bitget in total dominate in 51% of the market, while Chicago Mercantile Exchange (CME) has a 9% open percentage of ETH, according to Couminggass. This contrasts with Bitcoin Futures, where CME runs a 24% market share.

The demand for the utilize of ETH Longs has dropped

Increased activity in Futures ETH contracts usually indicates the interest of institutional investors, because open interest measures the demand for the lever. However, buyers (long) and sellers (shorts) are always matched, so the boost in open percentage does not indicate positive perspectives.

To assess whether the buyers are looking for a larger lever, analysts should compare ETH futures monthly contract prices to obtain exchange rates. In neutral markets, these derivatives usually trade 5% to 10% higher within annuals to take into account the extended settlement period. If salesmen become bear, this bonus will probably fall below this range.

The annual contribution for monthly ETH timely contracts dropped to below 4% on March 21, compared to 5% two weeks earlier. This decrease in the bonus of Futures suggests reduced encouragement of traders to utilize the “cash and transfer” strategy, which includes the sale of Futures contracts, while buying an ETH point to capture the bonus as a enduring income trade.

Spot ETF outflow and reduced network fees price ETH

Part of the fall of Ether results from indigent demand for American Ether rotational funds (ETFS), which within two weeks ended with a net outflow of $ 307 million in two weeks ending on March 20. The macroeconomic environment also weakened the trust of investors, as economists warn against the uprising recession According to Boston Globe, the risk associated with global tariff wars, inflation pressure and cuts of US government expenditure.

However, some analysts say that the recent weakening of ether prices is due to the lack of balance between network fees-in order to compensate for validation-and the interests of decentralized applications (DAPP) and scaling solutions of layer 2. This criticism was perfectly summed up by Martin Köppelmann, co-founder of Gnosis.

In a sense, the successful transition of Ethereum to proof of the table and the introduction of blob space in order to boost scalability by developing-at the same time significantly increasing the capabilities of the network-it is also perceived as factors limiting the boost in ether prices. Despite the low costs of transactions of layer solutions 2, some ETH investors believe that they are not properly rewarded.

The price of Eterra was pressure on the growing macroeconomic risk, while the demand for DAPPS is still falling – whether because of the increased competition or indigent percentage of investors. 7-day revenues from the Ethereum basic layer dropped to USD 605,000 on March 17, which is a acute drop from $ 2.5 million just two weeks earlier.

There is no indication that the growth of Futures in ETH Open interest is powered by stubborn positioning. On the contrary, the demand for long lever positions remains particularly tender, which suggests cautious market moods.

This article is used for general information purposes and should not be and should not be treated as legal or investment advice. The views, thoughts and opinions expressed here are themselves and do not necessarily reflect or represent the views and opinions of Cointelegraph.