- ETH open interest rose from $4 billion in July to $8.43 billion this week.
- Analysts say investors are speculating on ether futures ahead of Ethereum’s Merge this month.
- Another metric suggests traders have turned bearish on the short-term growth of ether.
Over the past month, Ethereum derivatives have outperformed Bitcoin, and data suggest it could be in anticipation of the upcoming merge. According to a study by Kaiko, which cites data from numerous cryptocurrency exchanges, volumes of derivatives tracking ether (ETH) have surged by about 10% over the previous month and now exceed those of bitcoin (BTC).
According to a study by Kaiko, which cites data from numerous cryptocurrency exchanges, volumes of derivatives tracking ether (ETH) have surged by about 10% over the previous month and now exceed those of bitcoin (BTC).
As of now, ether futures account for 57% of the whole market, up from 45% on August 1. From under $4 billion in July, open interest has increased to over $8.43 billion this week. This indicates that substantial leverage has been used to drive up ether prices during the preceding few weeks.
The 24-hour volume for ether futures has surpassed $35 billion, compared to the $32 billion seen on bitcoin futures, the market leader.
Data regarding funding rates implies that a sizeable chunk of that open interest may come from short trades or bets against price rises. Analysts suggest this could mean investors are likely speculating on ether futures to position themselves ahead of Ethereum’s Merge later this month.
According to Conor Ryder, a Kaiko analyst, the popularity of short trades is on the rise as investors hedge their long spot ether positions in anticipation of the Merge or speculate on a failed or delayed transition to proof of stake.
The second reason, the prospect of an Ethereum fork and the subsequent airdrop of a new ETHPOW token, is becoming an increasingly popular wager among investors, Ryder added.
The reported price of an ETHPOW token on futures markets is $18, 1.5% of the value of ether at present.
However, another key statistic shows that traders have turned bearish on the short-term growth of ether (ETH) as they focus on the contracts ahead of Ethereum’s Merge next month, with about $140 million in liquidations over the past 24 hours.
In the absence of a significant stimulus for bitcoin, the recent rise of Ether shows that there is currently greater interest in that market. The price of ether has been highly volatile since August 29th, rising to over $1,600 on Tuesday morning from $1,420, then falling to $1,472 on Tuesday evening before rising again to over $1,620 on Wednesday morning.
Futures market funding rates have been cited as a possible cause of the recent price fluctuations by certain analysts. They also claim that the rates will cause a short squeeze.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
