As the Ethereum (ETH) derivatives market continues to exhibit unprecedented growth, the Ethereum market may now be facing a significant momentum shift.
Specifically, while Bitcoin's price movement remains the dominant force in the market, Ethereum's derivatives activity indicates it may be gearing up for significant upward momentum.
ETH Open Contracts and Leverage Reach New Highs
According to recent analysis by CryptoQuant's EgyHash, Ethereum's open contracts have surpassed previous historical highs, increasing by 40% in just four months, exceeding the $13 billion threshold.
The surge in open contracts (representing the total number of outstanding derivative contracts) reflects the increasing participation of traders and institutions in the Ethereum market.
Additionally, EgyHash noted that the funding rate has turned moderately positive, indicating that long position traders currently dominate. This aligns with sentiments favorable for ETH price increases in the short term.
The increase in open contracts is not the only indicator of Ethereum's heightened activity in the derivatives market. CryptoQuant analysts highlighted Ethereum's estimated leverage.
EgyHash revealed that this indicator, calculated as the ratio of open contracts to exchange currency reserves, has also reached a historical high of +0.40.
In commenting on what these rising indicators mean for market participants, CryptoQuant analysts wrote:
While these trends highlight positive sentiment in the market for ETH, caution is warranted regarding potential risks. If prices fluctuate suddenly, the increase in leverage and dominance of long positions could heighten the likelihood of a long squeeze, potentially leading to market corrections.
Ethereum Market Performance
Regardless of how positive the key indicators are, Ethereum remains one of the underperforming cryptocurrencies in the market, especially compared to Bitcoin.
Notably, although Bitcoin continues to break through major resistance levels to set new highs, ETH is still down 36.2% from its historical high of $4,878 set in 2021.
However, as of today, the asset seems to be preparing for an upward trend. As of the time of writing, Ethereum has risen 0.9% in the past day, currently trading at $3,112.
Renowned analyst Ali on X recently shared his views on the asset, indicating that Ethereum might soon surpass Bitcoin. The analyst cited several key indicators and trends to support this claim.
According to Ali, the altseason indicator is flashing buying opportunities, with ETH's MVRV momentum nearing a key moving average, suggesting significant upside potential.
The analyst also mentioned the influx of spot exchange-traded funds (ETFs) and increased whale activity. Ali then stated that Ethereum might test levels of $4,000 and $6,000 based on the rising parallel channel. He also emphasized the bullish theory that ETH could potentially reach $10,000.
