Blog

According to an analyst, there could also be a sample of the Open Interest and Bollinger Bands that Ethereum has adopted lately.

Ethereum Open Interest & Bollinger Bands May Have Correlation

As defined by an analyst in a CryptoQuant post, the sample of the ETH Open Interest and Bollinger Bands could also be used to investigate the market’s actions. The first of those metrics, the “Open Interest,” refers to a measure of the entire quantity of Ethereum futures contracts which are open on all by-product exchanges.

When the worth of this indicator is excessive, it implies that the traders at the moment have numerous positions out there at the moment. Generally, throughout such circumstances, the entire leverage out there can also be excessive, which might result in the worth displaying volatility.

On the opposite hand, low values suggest the futures market doesn’t have that many positions open proper now, which might naturally consequence within the worth changing into steady.

The different metric, the “Bollinger Bands,” is a set of three traces which are usually used for locating the volatility of an asset. The center line on this technical indicator is the 20-day shifting common (MA) of the coin in query, whereas the higher and decrease traces are primarily based on the usual deviation of the worth from the 20-day MA.

Whenever the worth approaches the decrease or higher sure of the metric, it may be a possible signal that the asset is undervalued or overvalued, respectively, in the meanwhile.

Now, here’s a chart that exhibits the pattern in each these Ethereum indicators during the last couple of years:

The doable relationship between these two metrics | Source: CryptoQuant

In the above graph, the quant has highlighted the factors on the chart the place a possible sample between the Ethereum Open Interest and the Bollinger Bands might be obvious.

It appears like at any time when the ETH worth has made a contact of the higher sure of the Bollinger Bands whereas the Open Interest has been at comparatively excessive values, the asset has noticed a decline.

Similarly, when Ethereum has retested the decrease sure of the metric and the Open Interest has been at low values, a rebound within the cryptocurrency has often occurred.

Three of the retests have been seen this 12 months alone, because the March and June rebounds each occurred whereas the latter sample had fashioned, whereas the height in April had coincided with the previous sample.

From the chart, it’s seen that the Open Interest is at the moment at a stage that’s neither too excessive nor too low. The Bollinger Bands have seen a compression just lately, because the asset has registered very low volatility.

The worth is retesting the decrease sure at the moment, however because the Open Interest isn’t at low values, it’s unsure whether or not Ethereum would rebound right here, because the sample isn’t but just like the earlier cases.

ETH Price

At the time of writing, Ethereum is buying and selling round $1,800, down 2% within the final week.

Looks like ETH hasn't been shifting a lot in latest days | Source: ETHUSD on TradingView

Featured picture from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com