Bitrabo Editorial
Glassnode data on May 30th showed that Ethereum open interest for perpetual futures contracts on Deribit, a crypto derivatives exchange, is at a three-year high. Perpetual futures are derivatives that track the performance of an underlying asset, in this case, Ethereum, allowing traders to not only buy but also short using leverage. This financial derivative enables investors to gain exposure to the underlying asset without buying or selling it directly.
At $544 million, there are now more open Ethereum perpetual positions, long and short, on Deribit than in the last three years. Traders have left these positions open, expecting the price to move either in or against their order. Often, open interest in any crypto derivatives exchange can be used as a sentiment indicator, indicating the level of interest in a particular asset. For instance, increasing open interest in a market that has not been impacted by unfavorable regulations, hacks, or blockchain failures may indicate bullish sentiment. Then traders open more long positions, expecting price gains.
While Ethereum’s open interest on Deribit is at a three-year high, the cumulative open interest contracts across all derivatives exchanges like Binance, Bybit, and OKX all remain within range. According to Coinalyze data on May 30th, there is $5.4 billion in ETH open interest across popular exchanges, representing a 2.6% increase in the last 24 hours. Out of this, $4.9 billion of the total open interest represents contracts from perpetual futures. Meanwhile, only about $440 million are contracts from Ethereum futures. Furthermore, most of these positions open on Binance, which had $2.2 billion in Ethereum open positions, $1.2 billion in OKX, and $1 billion on Bybit. Deribit has $682 million in total Ethereum open interest in the past 24 hours.
Are ETH Bulls Ready?
The slight increment in Ethereum open interest could suggest that more traders are closely watching ETH prices, even positioning themselves for further gains or drops. At spot rates, ETH prices have increased by 8% from May lows, near $2,000, a critical reaction level. The recovery follows a deep retracement from $2,100, last registered in April 2023. From mid-April to mid-May, prices dropped to as low as $1,760 before flattening and rising to spot rates. Overall, ETH remains within a bullish formation, having risen 40% from mid-March 2023. However, whether this trend will continue, possibly driving the number of open interest positions, depends on whether bulls add to their longs, forcing Ethereum prices above the psychological $2,000 level.
Feature Image From Canva, Chart From TradingView