Ether's price dropped significantly in March despite a rise in futures open interest. Investors note possible risks and weak demand for leveraged positions.
Ether Price Drop and Open Interest Rise
Between March 19 and 21, Ether's price fell by 6% after failing to break the $2,050 resistance level. More significantly, it has declined 28% since February 21, which is considerably worse than the broader crypto market's 14% drop. Despite the price decrease, Ether futures open interest reached an all-time high on March 21, raising concerns about potential risky positions by major investors.
Decreased Demand for Leveraged Longs
The increase in open interest typically signals institutional investor interest, but current data shows weak demand for leveraged long positions. The premium for ETH monthly futures fell below 4%, indicating reduced incentives for traders to use the 'cash and carry' strategy.
ETF Outflows and ETH Price Pressure
One reason for the ETH price drop is the weak demand for Ether-based ETFs, with net outflows of $307 million. Macroeconomic factors also negatively impact investor confidence. Analysts point to a mismatch between network fees and the interests of decentralized applications.
Current open interest figures in Ether futures do not provide grounds for optimism. Decreased demand for leveraged positions and macroeconomic risks contribute to caution in the market. Ether's price continues to face pressure.
