Ethereum Open Interest

Definition ∞ Ethereum open interest represents the total number of outstanding derivatives contracts for Ethereum that have not yet been settled. This metric provides insight into the total amount of capital allocated to ETH futures and options positions across various exchanges. A rising open interest, especially when paired with increasing prices, often signals growing market participation and strong conviction among traders. Conversely, a sharp decline can suggest position closures or waning market interest.
Context ∞ Ethereum open interest is a closely watched indicator for understanding market depth and potential future price movements of ETH. Significant changes in this value can precede periods of increased volatility, including short squeezes or liquidation cascades. Analysts frequently reference open interest data to gauge market sentiment and anticipate shifts in trading dynamics.