In the last 30 days The price of Ether (ETH) decoupled from Bitcoin (BTC) and recorded a 67.5% increase, while the leading price of the cryptocurrency has barely changed. Ether’s all-time high of $ 3.605 on May 5 was responsible for pushing the asset’s open futures rates to $ 10 billion.
This move raises some crucial questions as the dominance of the Bitcoin derivatives markets currently appears to be in question. On May 4, Ether’s aggregate futures volumes surpassed Bitcoin for the first time in history.
Coinalyze volume data shows CME Bitcoin futures traded for $ 2.6 billion and CME Ether futures traded for $ 1.1 billion on May 4th. However, The total volume of Ether was $ 87 billion versus $ 81 billion for Bitcoin.
Some might argue that volumes are not as relevant as open interest, which is a fair estimate. Open Interest represents the total number of contracts in question, regardless of whether they were traded at any given point in time. With that in mind, Bitcoin still has double the open position of $ 10 billion in Ether futures.
The graph above shows a staggering 117% increase in Ether futures in two months. It’s also worth noting that CME contracts reached an open interest of $ 460 million, a seven-fold increase over March.
The exploding volume of ether futures signals growing interest from traders
In order to judge whether the market is bullish it is necessary to analyze your premium. The premium measures the price gap between the prices of futures contracts and the regular spot market. This indicator is commonly known as the base and should show an annualized premium of 10% to 20%.
The stable coin interest rate is the main reason for this discrepancy as the futures participants withhold settlement by opting for derivative contracts.
The graph above shows that the Ether Futures premium peaked at 45% in mid-April and has since normalized to around 25%. This data is very encouraging as it suggests that despite the fact that the price of ether is reaching successive historical highs, there is no extreme optimism.
While some analysts interpret this data as a “glass half full,” others might say it represents a lack of conviction on the part of professional traders. Regardless of the point of view, it is important to consider the impact of carry trading, which negatively affects the base indicator.
Investors looking for fixed income trading sell Ether Futures contracts at the same time they buy Ether for cash.
Overall, there appears to be healthy growth in the ether futures markets regardless of how the data is interpreted.
A possible Bitcoin open interest swap still seems a long way off. In any case, The general surge in crypto derivatives is beneficial to the market.
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