Ether futures open to all-time high demand and options trading volume
The price of Ether (ETH) improved by $4,000 on March 23, short-term exceeding $3,890, resulting in long liquidation of $46.58 million. Following that rally, Ethereum futures open interest hit a record high of $17.09 billion on May 28.
Meanwhile, with continued consolidation above $3,700, Ethereum futures open interest is up $16.1 billion, according to data from Coinglass.
Meanwhile, Chicago Mercantile Exchange (CME) options for Ether futures hit a monthly high in May.
According to a CCData report published on June 5, the trading volume of ETH options on CME increased by 115% to 931 million dollars. This marked a significant increase from April's $615.75 million and set a record high for monthly trading.
“Increased trading activity in ETH instruments underscores institutional interest in the asset following a sudden pivot from the SEC on the spot Ethereum ETF applications in the US.”
Some analysts argue that the increased trading activity in the Ether derivatives market reflects increased institutional interest in ETH following the approval of the Spot Ethereum ETF on May 23rd.
“Ether's CME open interest is reaching an all-time high, indicating institutional interest in ETH/BTC trading ahead of S-1 filings and the eventual launch,” said analysts at algorithmic trading firm Wintermuth.
In a report published on May 27, the trading firm said that the increase in Ether options suggests an increase in implied volatility due to high expectations of significant price movements. Implied volatility measures market expectations of future volatility over specific time periods based on option prices.
As spot Ethereum ETFs approach launch, market participants expect the price of Ether to become more volatile.
“The market's reaction to the SEC's sudden change shows that investors were caught off guard. The negative ether sentiment that has built up over the past month is increasing. Although the price action may still be swayed by the broader market picture, the prospects for future volatility have improved.
Ether's perpetual contracts share the same tyranny.
Similarly, other metrics, such as perpetual contracts (inverse swaps), reflected a similar bullish bias. These derivatives, also known as reverse swaps, have an embedded rate that is typically recalculated every eight hours, indicating excessive demand for long positions.
According to data from Coinglass, the ETH funding rate increased to 0.0175 in the last two days, which is 0.367% for the week. Typically, in conditions driven by increasing optimism, the rate remains positive. Therefore, traders using perpetual contracts exhibit the same brutality seen in futures markets.
At the time of publication, the price of Ethereum is $3,843, up 1.2% in the last 24 hours, according to data from CoinGecko.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
