Ethereum, the leading smart-contract Layer-1 blockchain, has witnessed a sharp decrease in its open interest, which has dropped to $11.5 billion. It has dropped by $1.5 billion in the span of two weeks, according to data from CryptoQuant.
Open interest in Ethereum peaked on June 5, and since then, $400M of liquidations have taken place, with long liquidations standing at $285 million.
Prior to June 5, the previous all-time high in Ethereum’s open interest stood at $9.5 billion in 2021, when ETH’s price touched its all-time high of approximately $4,800.
Open interest is the total number of open derivative contracts that have not yet been settled.
A decrease in open interest thus bodes well for Ethereum, as market sentiment points to there being less chance of wild price swings in either direction caused by excess leverage. When those swings happen, it leads to liquidations in either direction.
ETH is currently trading at $3,616, an increase of 2% in the past 24 hours. The asset clocked a moderate gain of 3.1% in the past 7 days, according to CoinGecko.
Ethereum’s recent uptick can be attributed to short liquidations, as $19.33 million was liquidated in the past 24 hours, while long liquidations stood at $11.11 million, according to derivatives analytics platform Coinglass.
On Tuesday, leading Ethereum developer Consensys announced that the U.S. Securities and Exchange Commission (SEC) has closed its investigation into Ethereum 2.0 without filing any charges.
“This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.” the company tweeted.
This development comes as a positive surprise for market participants, as previously a report indicated that the SEC had internally deemed the asset to be a security.
SEC Chair Gary Gensler has previously said that U.S. spot Ethereum ETFs are likely to launch sometime during summer, however, he refused to provide clarity on whether the SEC considered the asset a security or a commodity.
Institutions have already started to express their interest in Ethereum ETFs.
Pentra Capital Management LP plans on investing $100 million when trading in U.S. spot Ethereum ETFs begins, according to Bitwise Asset Management. If Pentra Capital follows through with the purchase, it will not be able to sell the purchased shares in the open market for a period of six months.
Earlier this month, global asset manager VanEck dubbed Ethereum “digital oil” and forecasted that the leading smart-contract cryptocurrency will reach $22,000 by 2030.
Edited by Stacy Elliott.
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