- ETH briefly exchanged hands above $4000 on the 8th of March.
- The past two weeks have seen a spike in validator exits.
Leading altcoin Ethereum [ETH] faces a potential short-term pullback after it traded briefly at a three-year high on the 8th of March.
This decline may be due to the overheated nature of the coin’s Futures market, which historically precedes a sharp fall in its value.
According to data from Coinglass, ETH’s Futures Open Interest has crossed $13 billion, and, at press time, sat at its highest level since November 2021.
Source: Coinglass
An assessment of the coin’s historical performance revealed that on the 16th of November 2021, the bull run caused investors to pile into Futures contracts.
This led to an inflation of ETH’s price to the barely sustainable level of $4891, which now represents its highest price point in the altcoin’s history.
On that day, ETH’s Futures Open Interest peaked at $14 billion before experiencing a significant crash, lowering the coin’s value as a result.
In the six months that followed, ETH chased new lows and even exchanged hands below $1,100 by June 2022.
Further, the recent hike in ETH’s value has resulted in a surge in positive Funding Rates across crypto exchanges. This, paired with rising Open Interest, puts the coin at risk of declining.
High Funding Rates increase the risk of severe long liquidations, which may result in high market volatility and unpredictable price swings in either direction.
Validators do not want to be left out
AMBCrypto’s look at Ethereum’s on-chain activity revealed a recent increase in validators’ voluntary exit from the Proof-of-Stake (PoS) network.
This comes amid the new yearly highs recorded in ETH’s price and the desire of validators to profit from them.
According to data from Glassnode, the number of validators who have left the Ethereum network, observed on a seven-day moving average, has increased by 42% in the last two weeks.
Source: Glassnode
Read Ethereum’s [ETH] Price Prediction 2024-25
This has resulted in a brief decline in the network’s participation rate. Per Glassnode’s data, the participation rate on the PoS network was at a two-week low of 99.46% as of this writing.
There were 999,660 active validators on the Ethereum network during this time, each staking over 32 ETH in the network’s 2.0 contract.