Ethereum (ETH) has been bearish recently, but-chain metrics suggest the bulls are gaining momentum.
In a recent report, Crypto Quant analyst Burak Kesmeci identified a shift in two key metrics, the taker buy-sell ratio and Ether Open Interest (OI), suggesting the bearish trend might end soon.
The report revealed that Ether OI has surged while the taker buy-sell ratio turned positive, indicating buyers have returned to the market.
Ethereum Long Positions Surge in Past 12 Hours, Data Shows
Burak Kesmeci pointed out that the taker buy-sell ratio has turned positive.
This suggests that Ether buy trades might be outpacing sell trades on crypto exchanges.
Kesmeci explained, “This metric, which calculates the ratio of buyers to sellers for Ether (across all exchanges), is positive again.
The fact that it is likely to start the week in the positive zone (as it currently appears) is promising.”
CoinGlass data supports Kesmeci’s observation. The data shows that more traders are betting on Ether’s price increase in the 12-hour timeframe.
Over 50% of Ether positions are long, indicating a growing optimism among traders.
Source: Coinglass.com
The observation is surprising because Ethereum’s price has been falling lately.
Notably, Ether has experienced a 23.57% drop since July 23, trading at $2,679 at 08:50 a.m. EST.
Moreover, the coin has dropped 2.13% in the past seven days.
However, despite this decline, traders seem to be getting more optimistic, probably anticipating prices to increase soon.
Rising ETH Open Interest Points to Increased Market Activity
Another vital metric Kesmeci noticed is the Open Interest (OI) for Ether.
For context, OI shows the total number of options contracts traders currently hold.
On August 19, Ether’s OI stood at $10.69 billion, marking a significant 10% increase from the previous day.
The CryptoQuant analyst emphasizes the importance of this metric for Ether’s potential recovery.
He suggests that leveraged traders will need to return to the market for a significant upward price movement.
According to him, traders historically tend to show more confidence in taking positions as an asset’s price increases.
For example, his report stated that when Ether hit its highest price of the year at $4,066 on March 12, the Open Interest surged to $13.67 billion.
Later, when Ether’s price approached a similar level again in June, this time at $3,800, the OI soared even higher to $15 billion.
Kesmeci added, “This indicated a market correction was likely, and indeed, the correction occurred.
“So, he believes the recent surge in OI indicates a potential price recovery for Ethereum.