The value of Ether (ETH) has been on the rise lately, and so has Ethereums open interest. While this signals bullish sentiment from traders, it also indicates impending volatility and calls for caution in the market.

According to CryptoQuant analyst Burak Kesmeci, Ethereums open interest data has increased by almost $1.5 billion in the past three weeks.

Ethereum Open Interest Soars

Open Interest refers to the number of open long and short positions for financial instruments. A higher open interest value signifies increased confidence in an assets price trajectory, while a lower value is a sign of uncertainty. At the time of writing, data from CoinGlass showed that the total Ethereum futures open interest across all exchanges was $14.96 billion, with a 24-hour increase of 7.43%.

Kesmeci related ETHs open interest data to the launch of the United States spot Ethereum ETFs, revealing that the metric recorded a local peak on July 23, when the funds went live on trading platforms. However, the open interest data eventually fell by roughly $600 million, allowing the market to take a bit of a breather.

The crypto market could witness another plunge in open interest data any moment from now because as leveraged trading rises, so do the chances of liquidations. When liquidations get triggered, the market also experiences high volatility.

Therefore, I believe that OI is one of the data points that needs to be closely monitored, the CryptoQuant analyst added.

ETH Price Outlook

At press time, ETH was up 4% in the past 24 hours, changing hands around $3,383. However, the asset has fallen 3% in the past week and slightly in the past month. Ether recorded an uptick within 24 hours after the Ethereum ETFs went live, but its performance has not been encouraging since then.

The spot ETFs, on their part, have recorded overall outflows on three out of their four days of trading. Following a $106 inflow on July 23, the funds saw outflows of $133 million, $152 million, and $162 million on the second, third, and fourth trading days.

Analysts insist that the ETFs would have a weaker effect on Ethereum than Bitcoin because the formers multiplier effect is lower than the latters. Nevertheless, ETH is expected to rally in the coming months since the market is still in a bull cycle.