ether 
ETHUSD Although it rose 8.8% between October 14 and October 15, the $2,650 resistance level proved more difficult than expected. Traders are increasingly concerned that Ether's total futures open interest reached a record high on October 16th, which could be a red flag.
This spike in demand for leveraged ETH positions typically precedes a severe price correction. On October 15th, the total accessible Ether futures market exceeded 5 million ETH for the first time, an increase of 12% from four weeks ago.
The last time Ether's total open interest peaked on August 2nd, the price of Ether plummeted 31.7% in less than four days, falling from $3,205 to $2,186. Will history repeat itself this time?
Rising demand for ETH futures is not necessarily bearish
Increasing demand for ETH futures is not necessarily bearish, so a key insight from this data is whether system-wide leverage is increasing or decreasing. The larger the stake, the more likely there is a sudden price change due to forced liquidation.
Although derivatives markets may seem like a zero-sum game, the impact on spot prices is significant. This is primarily because futures contracts tend to be traded in much higher volumes with leverage. Additionally, whales and market makers rely on derivatives to quickly hedge exposures, a process that is nearly impossible in the spot market due to the low liquidity available.
When a forced liquidation of $50 million or more occurs in the futures market, the arbitrage desk immediately de-risks the spot market. This action, whether upward or downward, further accelerates the price movement, creating an effect known as “cascading liquidations.” This is exactly why traders monitor open interest to detect the risk of excessive leverage leading to unexpected price movements.
On August 2, open interest peaked at 4.75 million ETH, an increase of 15% compared to four weeks ago. Basically, the current market situation closely mirrors the August structure. A total of $279 million in leveraged long positions were liquidated, but this figure does not include traders who used stop-loss orders or voluntarily closed positions during the period.
Other examples include April 1st, when open interest increased by 21% in four weeks to over 4 million ETH. In this case, the price of Ether started at $3,648 and eventually bottomed out at $2,604 on April 13, a 24% decline in 12 days. Therefore, there is ample historical evidence that peak formation in Ether's open interest typically precedes a strong price correction.
Bitcoin and broader market trends could set ETH price trend
Although the post-mortem makes it easier to identify the local top of the Ether open interest chart, there is no way to predict whether this number will continue to increase and exceed 5.1 million ETH. Recent examples of such peaks have occurred while the broader crypto market has been trading sideways or undergoing short-term corrections, further complicating the analysis.
Assuming that the overall crypto market trend remains neutral, it is entirely within the realm of possibility for the Ether price to decline by 20% to 25% to around $1,960, so traders should be wary of such a scenario. You need to prepare accordingly. On the other hand, in the case of Bitcoin, 
BTCUSD Finally breaking through the $70,000 resistance level could increase the use of leverage on Ether, fueling bullish momentum and leading to higher prices.
This article is for general information purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, ideas, and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
