Ethereum, the second-largest cryptocurrency by market capitalization, has been experiencing a prolonged period of price correction, leaving investors and traders questioning when the crypto asset will regain its upward momentum. Recent on-chain metrics analyzed by an expert from CryptoQuant suggest that Ethereum might be nearing the end of this correction phase, potentially setting the stage for a bullish turn.
The analysis, conducted by CryptoQuant analyst Burak Kesmeci, points to key on-chain metrics indicating that the necessary liquidations on leveraged positions have occurred, and buyers are slowly regaining their footing. Specifically, two metrics suggest a possible bullish reversal: the Taker Buy Sell Ratio and Open Interest (OI), both of which provide insights into market sentiment and trading activity.
The Taker Buy Sell Ratio measures the ratio of buyers to sellers across all cryptocurrency exchanges. A positive ratio suggests buyers are becoming more dominant, which can be an early signal of increasing demand and potential price appreciation. According to Kesmeci’s analysis, the Taker Buy Sell Ratio for Ethereum has recently turned positive, indicating that buyers are beginning to regain control after a period of dominance by sellers. This shift in market stance is a promising sign that Ethereum could be on the verge of a recovery.
In addition to the Taker Buy Sell Ratio, Open Interest (OI) is another crucial metric highlighted in the analysis. OI represents the total number of open long and short positions in the market. High levels of OI often indicate that a significant price movement is imminent, as traders are heavily invested in the market’s next direction. Kesmeci noted that in June 2024, when Ethereum’s price reached $3,800, the OI data hit a record high, surpassing $13 billion. This indicated a market correction was likely, and indeed, the correction occurred. On August 5, 2024, also known as the “bloody Monday” triggered by events in Japan, OI dropped to $7 billion.
The decline in OI, coupled with the recent liquidation of leveraged positions, suggests that the market has undergone the necessary corrections and may now be stabilizing. For Ethereum’s price to move significantly, Kesmeci disclosed that it is likely that leveraged players will need to re-enter the market, driving demand and pushing prices higher.
The analysis concludes that while the recent data shows buyers are gradually regaining strength, it remains to be seen whether this is the beginning of a sustained rally or just a temporary rebound.
