Futures open interest hits a record high, can Ethereum become the king of the bull market again?
Recently, as the prices of gold and silver hit new highs repeatedly, Bitcoin, known as "digital gold", also lived up to expectations, standing on the $10,000 mark. Under the joint rise of mainstream coins and altcoins, the cryptocurrency market continues to strengthen, becoming a beautiful landscape.
In this wave of bull market performances, there is no doubt that Ethereum is at the forefront of the team. On July 25, ETH started to skyrocket, leading the rise of mainstream currencies all the way. Until July 28, ETH set a new high for the year, reaching a peak of $333, which was only $33 away from the 2019 high of $366.
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Ethereum futures open interest hits record high
According to data from market analytics firm Skew, the total value of open interest in Ethereum futures has surpassed the $1 billion mark, a new all-time high.
ETH futures started to rise at the beginning of 2020, totaling nearly $900 million. However, under the influence of the new crown epidemic and the crash of the US stock market, the cryptocurrency market has "fallen". By mid-March, open interest in ethereum futures had fallen to less than $400 million. However, the open interest in ETH futures has started to rise consistently, spurred by the recent rise in ETH prices.
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Cumulative Open Interest in Ethereum Futures Source: Skew
A futures contract is an agreement between two parties to buy or sell a given asset at a fixed price at a predetermined point in the future. The buyer of the contract expects the price of the asset (such as ETH) to be different from the contract price at the time of execution, thereby earning an instant profit when the obligation is fulfilled. Whereas contract issuers earn a fee, called a premium, on the contracts they sell, this fee is expected to be greater than the loss in buying or selling the asset to fulfill their obligations.
Although Ethereum futures are rising, it is still a long way from Bitcoin. Bitcoin futures open interest crossed the $4 billion mark on July 21, but it’s worth noting that Ethereum futures open interest has risen by as much as Bitcoin futures since the recent price rally began. times. As Ethereum begins to lead a new market cycle, ETH futures open interest may soon overtake Bitcoin as the asset to watch.
With the skyrocketing price of ETH and the recent smooth progress of Ethereum 2.0, investors are confident in the long-term potential of the decentralized protocol, which is a milestone. Futures contracts are the domain of the more sophisticated and professional traders, suggesting that "smart money" is very bullish on where ethereum is headed next.
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Can the "king of the bull market" rally continue?
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ETH/USD candlestick chart Source: OKEx
According to the OKEx ETH/USD market, as of July 28, the price of Ethereum reached a peak of $333, which is only $33 away from the 2019 high of $366. Ethereum has soared 40% in the past 7 days, which is reminiscent of the strength of Ethereum in the 2017 bull market.
However, behind the surge, it is inevitable that some indicators have also undergone significant changes.
According to Santiment analysis, the rise in the price of Ethereum has led to the first shortage of daily active addresses since June 17, and the shortage of daily active addresses usually means that a correction may occur. However, such a strong momentum in Ethereum may also indicate a consolidation at a higher level.
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Ethereum transaction volume & active addresses in 2020 Source: Coinmetrics
Whether it is the strong trend of Ethereum price or the surge of Ethereum network usage, it is undeniable that DeFi is the huge driving force behind it. But at the same time, due to network congestion and transaction fees soaring, active addresses on Ethereum have declined.
According to the latest research on DeFi by Xangle, a global cryptocurrency asset disclosure platform, the transaction volume and fees of the Ethereum network have seen huge growth in the second quarter of 2020, with the daily ETH transaction volume surging by 61.7%, and the transaction volume exceeded 1 million; another On the other hand, transaction fees surged 687.9%. This volatility closely matches the peaks seen during the bull market in late 2017 and early 2018, Xangle said.
Ethereum futures open interest hit record highs, Ethereum network trading volume continues to soar, is all this a harbinger of a big bull market? In addition, according to previous media reports, Ethereum 2.0 is expected to be launched in November, coupled with the blessing of the DeFi market, can ETH set a new bull market record again?
The market imagination space before our eyes is infinite.
