In the last 30 days, the price of Ether (ETH) has decoupled from Bitcoin (BTC) to record a gain of 67.5%, while the leading price of digital currency has barely moved . Ether’s all-time high of $ 3,605 on May 5 was responsible for driving open interest on asset futures to $ 10 billion.
This move raises some crucial questions, as the dominance of Bitcoin derivatives markets appears to be in question at the moment. On May 4, Ether’s aggregate futures volumes surpassed those of Bitcoin for the first time in history.
Volume of future aggregates of Ether and Bitcoin, €. Source: Coinalyze
Coinalyze volume data shows that $ 2.6 billion of CME Bitcoin futures were traded, along with $ 1.1 billion in CME Ether futures on May 4th. However, Ether’s aggregate volumes led to $ 87 billion versus $ 81 million for Bitcoin.
Some might argue that volumes are not as relevant as open interest, which is a fair assessment. Open interest represents the total number of contracts at stake, regardless of whether they have been negotiated on a specific date. In that sense, Bitcoin still has twice the open interest of Ether’s $ 10 billion futures.
Ether futures add open interest, €. Source: Bybt
The graph above shows a mind-boggling 117% increase in Ether futures in two months. It’s also worth noting that CME’s contracts reached an open interest of $ 460 million, a sevenfold increase since March.
The dizzying rise in Ether futures volume points to growing interest from traders
To assess whether the market is leaning higher, your cousin should be analyzed. The premium measures the price gap between the prices of futures contracts and the regular spot market. This indicator is commonly known as the basis and should indicate an annualized premium of 10% to 20%.
The stable currency lending rate is the main reason behind this discrepancy, as futures participants are withholding liquidation when opting for derivative contracts.
OKEx ETH futures base at 3 months. Font: Skew
The graph above shows that Ether’s futures premium peaked at 45% in mid-April and has since normalized close to 25%. These data are very encouraging, as they indicate that there is no extreme optimism even though the price of Ether reaches consecutive all-time highs.
While some analysts will interpret this data as a “half-full glass,” 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 the carry trade, which negatively presses the base indicator.
Investors looking for a fixed income transaction will sell Ether futures contracts at the same time they buy Ether in cash.
Overall, there appears to be healthy growth in Ether futures markets, regardless of how the data is interpreted.
As for a possible open exchange interest in Bitcoin, this seems to be a long way from happening. Either way, the overall increase in digital currency derivatives is beneficial to the market.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every movement of investment and trade involves a risk. You have to do your own research when making a decision.