Ether (ETH) Could See Price Volatility Soon Due to These Metrics: CryptoQuant

Throughout the week, ether (eth) received a lot of attention from crypto investors as anticipation over the approvals of its spot exchange-traded funds (ETFs) intensified.

While the crypto asset rallied significantly as the market awaited the U.S. Securities and Exchange Commission's (SEC) decision on ETFs, analysts at CryptoQuant identified On-chain dynamics that could trigger huge volatility soon.

eth demand surges due to ETF approval

Earlier this week, eth rose 25% in two days, surpassing $3,900, its highest level since mid-March. The rally came after market experts, led by Bloomberg ETF analysts, increased the odds of the SEC approving the funds from 25% to 75%.

CryptoQuant revealed that eth prices received upward pressure from traders in the perpetual futures market and permanent holders of the cryptocurrency.

Futures market perpetual traders “aggressively” opened long positions in ethereum expecting higher prices as ETF approval rumors circulated. As a result, total open interest in the futures market skyrocketed to its highest level since January 2023, from 2.8 million eth to 3.2 million eth ($11.7 billion) in a few hours.

Traders gained more exposure to eth than btc, as seen in the ethereum–bitcoin open interest ratio, which increased from 0.54 to 0.67. The surge revealed that ether's total open interest was 67% of that of bitcoin, indicating that market participants preferred greater exposure to eth than the largest digital asset on the margin.

Furthermore, buy orders dominating sell orders in the perpetual futures market increased upward pressure on eth prices, as seen with the buyer's bid-ask ratio hovering above one.

Increase in eth exchange flows

Furthermore, demand for eth gained strength, with permanent holders accumulating over 100,000 eth, its highest daily level since September 2023, in 24 hours. Similarly, the amount of eth staked recovered. After falling to 32.4 million on May 20, the amount of eth staked increased again to 32.5 million, indicating investor confidence in the cryptocurrency.

With demand for eth surging, the asset's daily net flows to exchanges rose to 62,000, its highest level since early March. Most of the flows went to crypto exchanges Binance and Bybit. CryptoQuant said that high exchange flows are historically associated with price volatility, as investors may want to sell their assets to benefit from potential price increases following ETF approvals.

Meanwhile, eth ethereum/” data-wpel-link=”external” target=”_blank”>was floating around $3,700 at the time of writing, having risen 1% in the last 24 hours.

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