Author: Nancy Lubale, CoinTelegraph; Translated by: Baishui, Golden Finance
On March 23, ETH price briefly dropped below $4,000, falling below $3,890 before a correction due to $46.58 million in leveraged long liquidations. Following this, Ethereum futures open interest hit an all-time high of $17.09 billion on May 28.
Likewise, as Ethereum futures open interest continues to consolidate above $3,700, its open interest remains high at $16.1 billion, according to Coinglass.
ETH futures open interest. Source: Coinglass
Meanwhile, monthly trading volume for CME Ethereum futures options hit an all-time high in May.
According to a report published by CCData on June 5, CME’s ETH options trading volume increased by 115% to $931 million. This is a significant increase from April’s $615.75 million, setting a new high for monthly trading volume.
“The increase in ETH instrument trading activity highlights growing institutional interest in the asset following the SEC’s abrupt shift toward spot Ethereum ETF applications.”
CME ETH options monthly historical trading volume. Source: CCData
Some analysts believe that the increase in trading activity in the Ethereum derivatives market indicates that institutional interest in ETH has increased following the approval of a spot Ethereum ETF on May 23.
“Ethereum’s CME open interest is approaching all-time highs, indicating institutional interest in ETH/BTC trading ahead of the S-1 filing and eventual launch,” said analysts at algorithmic trading firm Wintermute.
The increase in Ethereum options indicates a rise in implied volatility due to heightened expectations of large price swings, the trading firm said in a report published on May 27. Implied volatility measures the market’s expectations of future volatility over a specific time period based on option prices.
As the launch of a spot Ethereum ETF approaches, market participants expect the price of Ethereum to become more volatile.
“The market’s reaction to the SEC’s sudden reversal suggests that investors were caught off guard. The growing negative sentiment towards Ethereum over the past month has dissipated. While price action could still be influenced by the broader market situation, the odds of future upside have improved.”
Ethereum perpetual contracts are also bullish
Likewise, other indicators, such as perpetual contracts (inverse swaps), reflect the same bullish bias. Also known as inverse swaps, these derivatives contain embedded interest rates that are usually recalculated every eight hours, which indicates excessive demand for leveraged long positions.
ETH perpetual futures 8-hour funding rate. Source: Coinglass
Coinglass data shows that the ETH funding rate has risen sharply in the past few days to 0.0175, equivalent to 0.367% per week. Typically, the rate remains positive amid growing optimism. Therefore, traders using perpetual contracts are showing the same bullish sentiment as the futures market.
As of publishing time, Ethereum is trading at $3,843, up 1.2% over the past 24 hours, according to CoinGecko.
