According to an analyst, there could also be a sample of the Open Interest and Bollinger Bands that Ethereum has adopted in recent times.
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 overall quantity of Ethereum futures contracts which might be open on all spinoff exchanges.
When the worth of this indicator is excessive, it signifies that the buyers at present have numerous positions out there at present. Generally, throughout such circumstances, the overall leverage out there can also be excessive, which might result in the value displaying volatility.
On the opposite hand, low values suggest the futures market doesn’t have that many positions open proper now, which might naturally outcome within the worth turning into steady.
The different metric, the “Bollinger Bands,” is a set of three strains which might be usually used for locating the volatility of an asset. The center line on this technical indicator is the 20-day transferring common (MA) of the coin in query, whereas the higher and decrease strains are based mostly on the usual deviation of the value from the 20-day MA.
Whenever the value approaches the decrease or higher certain of the metric, it may be a possible signal that the asset is undervalued or overvalued, respectively, in the mean time.
Now, here’s a chart that exhibits the pattern in each these Ethereum indicators over the past couple of years:
The attainable 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 seems like at any time when the ETH worth has made a contact of the higher certain 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 certain of the metric and the Open Interest has been at low values, a rebound within the cryptocurrency has normally occurred.
Three of the retests have been seen this yr alone, because the March and June rebounds each passed off 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 present at a stage that’s neither too excessive nor too low. The Bollinger Bands have seen a compression not too long ago, because the asset has registered very low volatility.
The worth is retesting the decrease certain at present, 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 transferring a lot in current days | Source: ETHUSD on TradingView
Featured picture from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com
