Data shows Ethereum Open Interest increased by more than 4% after the cryptocurrency’s price plummeted.

Ethereum has seen a decline over the past day

The cryptocurrency sector as a whole has seen a decline at the start of the fresh month, with both Bitcoin and Ethereum down more than 5% in the last 24 hours. ETH has returned to the low $2,800 levels after essentially replicating the recovery that occurred in the last week of November.

The sudden price drop triggered a wave of liquidations on derivatives exchanges, leading to the floating of $158 million worth of Ethereum-related contracts. Of these, $140 million worth of liquidations were in long positions alone.

Below is a heat map from CoinGlass which breaks down the liquidation numbers associated with various digital asset symbols.

Interestingly, although significant liquidations have occurred, derivatives investors have remained undeterred.

Since the decline, interest in ETH Open has increased

As CryptoQuant community analyst Maartunn noted in X’s report postEthereum Open Interest has seen a surge following a price drop. “Open Interest” here refers to an indicator measuring the total number of ETH-related positions that are currently open on all centralized derivatives platforms.

Here is a chart shared by Maartunn that shows the trend of this indicator over the last few days:

As shown in the chart above, Ethereum’s open interest initially collapsed as prices dropped as long positions closed abruptly. However, as the ETH bear momentum weakened and the price stabilized in a sideways rhythm, the indicator began to gradually reverse direction, indicating that speculators began to open fresh positions.

Since the decline, ETH Open Interest has increased by almost $654 million, an augment of 4.3%. “It looks like the players are back for another round,” the analyst noted.

Historically, a high value of this indicator has usually been a factor causing cryptocurrency volatility. This is because the extreme number of positions indicates the presence of high leverage in the sector. In such conditions, any rapid change in assets could result in a huge number of liquidations in the market. These liquidations merely affect the price movement that caused them, making it more intense.

An example of this pattern could already be observed over the past day. As Ethereum Open Interest grows again, it remains to be seen whether more volatility will follow.