Ethereum’s price has enjoyed a remarkable rally over the past week, returning above the $3,500 level for the first time since July 2024. This one-week performance marks a turnaround in fortunes for the “altcoin king,” which has somewhat slowed its decline after a sturdy start to November.

While Ethereum’s current price pattern suggests there is still room to move higher, certain on-chain signals indicate the market may be on the brink of a pullback. One of these signals is open interest in ETH, which recently reached a up-to-date all-time high.

Is ETH price at risk due to growing interest?

In a Quicktake post on the CryptoQuant platform, an analyst nicknamed ShayanBTC revealed that while Ethereum’s price trajectory currently looks bullish, investors need to remain cautious. This projection is based on an “alarming divergence” in ETH futures market indicators.

Specifically, the relevant futures market metric is open interest, which tracks the total amount of open futures or derivatives contracts for a specific cryptocurrency (ETH in this case) in the market at a given time. It basically evaluates the amount of money being poured into Ethereum futures at any given time.

Ethereum’s open interest has reached a up-to-date all-time high of $17 billion, according to CryptoQuant data. Typically, rising open interest signals a change in investor sentiment, with investors increasingly speculating and preparing for a potential market move.

However, ShayanBTC noted that the significant escalate in open trades was not accompanied by a up-to-date record high in Ethereum’s price. According to the Quicktake expert, this discrepancy between price and open interest rate indicates a potential escalate in volatility and significant liquidation cascades.

ShayanBTC added:

If the Ethereum price faces a sudden decline or consolidation, futures traders’ over-leveraged positions could trigger a wave of forced liquidations, leading to rapid price declines.

At the time of writing, Ethereum is trading at just under $3,700, reflecting a gain of over 3% in the last 24 hours. According to CoinGecko data, the value of the altcoin has increased by almost 8% in the last seven days.

Ethereum whales are charging their bags

Fortunately, more on-chain data has emerged that defies the bearish outlook for the second-largest cryptocurrency. In a November 30 post on the X platform, prominent cryptocurrency analyst Ali Martinez revealed that a particular class of enormous Ethereum investors is busy in the market.

Data from CryptoQuant shows that Ethereum whales holding between 100,000 and 1,000,000 coins have purchased over 280,000 ETH in the last four days. This level of purchasing activity from such an influential class of investors can be considered bullish for the altcoin.

Featured image by DALL-E, chart from TradingView