Altcoin Season Soon? Quant Says This Ethereum Pattern Could Suggest So
May 27 2024 - 12:00PM
NEWSBTC
A quant has explained how a pattern currently forming in the
Ethereum Open Interest could imply the altcoin season is coming
“sooner than expected.” Altcoin Season May Be Approaching Soon
Based On Ethereum Pattern In a CryptoQuant Quicktake post, an
analyst has discussed about why an altcoin season may be coming
soon for the cryptocurrency sector, based on a trend taking place
in a couple of Ethereum and Bitcoin indicators. The first metric of
relevance here is the “Open Interest,” which keeps track of the
total amount of derivatives positions related to a given asset
currently open on all centralized exchanges. Related Reading: Shiba
Inu One Of The Most-Traded Tokens By Whales, Data Shows When the
value of this metric goes up, it means the speculators are opening
up fresh positions for the coin right now. On the other hand, a
decline implies the users are either closing up their positions of
their own volition or getting forcibly liquidated by their
platform. Now, here is a chart that shows how the trend in the Open
Interest has compared between Bitcoin and Ethereum over the past
year: As displayed in the above graph, the Bitcoin Open Interest
has been moving more or less sideways recently, while at the same
time, the metric has registered growth for Ethereum. This would
suggest that ETH has been seeing more appetite for derivatives
market contracts than the original cryptocurrency recently. One of
the driving factors behind this could be the news cycle related to
the approval of the spot exchange-traded funds (ETFs) for the
asset. In the same chart, the quant has also attached the data for
another indicator: the Estimated Leverage Ratio (ELR). This metric
measures the ratio between the Open Interest and the Exchange
Reserve for any asset. The latter is naturally the total amount of
the coin that’s currently sitting in the wallets of all centralized
exchanges. The ELR basically provides us with information about the
amount of leverage that the average user in the derivatives market
is opting for right now. From the graph, it’s visible that this
ratio has seen a surge for Ethereum recently but has been showing
flat action for Bitcoin. Thus, it would appear that not only has
ETH been seeing more speculative interest than BTC recently, but
also these users opening contracts are going for higher risk as
they are taking on more leverage. Related Reading: Analyst Says
“Only A Matter Of Time” Before Bitcoin Flies Past ATH The analyst
believes that the fact that Ethereum has overtaken Bitcoin in these
indicators could be a potential sign that an altcoin season may be
approaching soon. “If Ethereum’s price continues to consolidate in
the current range, it’s very possible that the altcoin season will
start sooner than expected,” notes the quant. It now remains to be
seen how things play out in the market in the near future, given
this shift of trend. ETH Price After seeing a slowdown earlier,
Ethereum has been back on track in the past couple of days as its
price has now climbed back above the $3,900 level. Featured image
from Dall-E, CryptoQuant.com, chart from TradingView.com
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