Ethereum Value Nears $4,000 Mark; Boosts Futures Open Interest to Record Highs
Summary:
Ethereum's (ETH) price briefly reached towards $4,000, causing futures open interest to hit a record $17.09 billion on May 28. The increase in trading activity signifies growing institutional interest, especially after the approval of spot Ethereum ETFs. This is validated by the bullish sentiment seen with perpetual contracts/inverse swaps. At publication time, Ethereum's price was $3,843, marking a 1.2% increase in the past 24 hours.
Ethereum's (ETH) value briefly flirted with the $4,000 mark on March 23, temporarily reaching beyond $3,890, but faced a corrective wave on account of $46.58 million in leveraged long liquidations. This rally was pivotal in pushing Ethereum futures open interest to a record value of $17.09 billion on May 28. Concurrently, the prolonged stability of Ethereum over $3,700 has ensured high futures open interest of $16.1 billion as reported by Coinglass.
In addition, monthly trading volumes of Ether futures options on the Chicago Mercantile Exchange (CME) recorded new highs in May. A report by CCData on June 5 reveals that ETH options trading volume on CME experienced a 115% surge to $931 million, a significant jump from April's $615.75 million and setting a new high for monthly trading.
The surge in trading activity signifies a growing institutional interest in ETH following the unexpected SEC pivot on spot Ethereum ETF applications in the U.S. Some analysts suggest that the trading activity spike in Ether derivatives is indicative of burgeoning institutional interest in ETH, especially post the sanctioning of spot Ethereum ETF on May 23.
Analysts from algorithmic trading company Wintermute stated that the rising open interest of Ether on CME suggests increased institutional focus on the ETH/BTC trade ahead of S-1 filings and an eventual launch. In a May 27th report, the firm noted that the rise in Ether options suggests higher implied volatility due to elevated expectations of significant price movements. As the launch of spot Ethereum ETFs draws closer, market players' expectation of volatility in Ether price escalates.
Other indicators like perpetual contracts (inverse swaps) also reflect bullish sentiment. These derivatives, also referred to as inverse swaps, host an inbuilt rate that typically adjusts every eight hours, signaling a high demand for leveraged long positions. Data from Coinglass shows that the funding rates for ETH have notably risen in the last few days to 0.0175, equivalent to 0.367% per week. This positive rate indicates prevalent optimism within traders using perpetual contracts, in line with bullishness seen in futures markets.
As of this publication, Ethereum's price stood at $3,843, marking a 1.2% increase over the past 24 hours according to CoinGecko.
Disclaimer: This news article does not constitute investment advice or recommendations. Investment and trading carry inherent risks, readers should engage in comprehensive research before making any financial decisions.
Published At
6/6/2024 9:14:12 PM
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