Can Ethereum Price Go To $4K? As the institutions turn bullish, open demand for ETH increases
Ether (ETH) futures open interest has risen to 9 million ETH since January 17th, the highest ever. In the year On January 13, Ethereum retested the $3,000 support following a 10% increase in open interest in two weeks, reflecting growing appetite for bullish positions. Traders question whether this move is growing bullish sentiment or increasing market volatility. .
Total open demand for Ether futures, ETH. Source: CoinGlass
Binance, Bybit and Gate.io control 54% of the market, the Chicago Mercantile Exchange (CME) with $3.2 billion, or 10% of open interest according to CoinGlass data. Those factors highlight Ethereum's comparatively low institutional adoption compared to Bitcoin (BTC), where CME holds a 28% share of open interest.
Since every long (buyer) is matched with a short (seller) in futures contracts, an increase in open interest is not bullish in nature. To determine sentiment, traders examine the costs of holding backed positions, such as futures premiums.
Futures premiums and options reflect market confidence
Ether futures 2-month annual premium. Source: Laevitas.ch
The annualized premium for ETH monthly futures stood at 12% on January 12, recovering from 10%. The broader cryptocurrency market by 12 percent in 30 days.
Ethereum 2-month options 25% delta skew. Source: Laevitas.ch
Similarly, the 25% delta skew for Ether options contracts, which measure bullish and bearish betting interest, reached -4% on January 17. This skew signal is slightly smaller than calls (buys) in the neutral range of -6% to +6%.
Together, these indicators suggest resilience in the confidence of professional traders. Still, one must evaluate the interest of retail traders in Ether perpetual contracts, also known as reverse swaps. These instruments closely track spot prices due to their short settlement periods. Funding rate reflects which side – long or short – wants more leverage.
Ether Perpetual Futures 8-Hour Funding Rate. Source: CoinGlass
The indicator is now 0.9% on the month, in line with last week. Falling from 0.5% to 1.9% in the neutral range, this rate indicates an increase in the balanced market sentiment, excessive bullishness or lethargy, leaving room for future price movements.
Macroeconomic conditions and the role of global financial freedom in boosting the sentiment of ETH
The broader macroeconomic landscape has boosted confidence in the ETH markets. Softer-than-expected inflation data for December boosted optimism in financial markets, fueling expectations for more Federal Reserve interest rate cuts in 2025.
Related: Trump's first week in office: Will crypto regulation take a back seat?
Adding to the bullish sentiment is the involvement of World Liberty Financial, a crypto project with close ties to US President Donald Trump, which recently bought cryptocurrencies including ETH as recently as December 2024. The company's strategy aligns with Trump's public statements in favor of blockchain. Creativity and digital assets.
Although ETH has shed 11% over the past 30 days, it remains positioned for a rebuild, with the potential to test $4,000 in the coming weeks, supported by improving trader sentiment and institutional participation.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
