Ethereum open interest for perpetual futures contracts on Deribit, a crypto derivatives exchange, is at a three-year high, Glassnode data May 30 reveals.
Perpetual futures are a type of derivative that tracks the performance of an underlying asset, in this case Ethereum, allowing traders to not only “buy” but also use leverage to short. These financial derivatives allow investors to gain exposure to the underlying without buying or selling it directly.
Ethereum open interest on debit in a maximum of three years
At $544 million, there are now more open Ethereum perpetual positions, long and short, on Deribit than in the last three years. The expansion in open positions now exceeds $542 million, recorded on April 20, 2023.
Open interest tracks the total number of open positions registered on a trading platform. These positions or contracts have not been liquidated, which means that traders have left them open, waiting for the price to move into or against their order.
Often, the size of the open interest on any crypto derivatives exchange can be used as a sentiment indicator, showing the level of interest in a particular asset.
For example, rising open interest in a market that has not been affected by a turbulent event, such as unfavorable regulations, hacks, or blockchain failures, may indicate bullish sentiment. In that case, traders are opening more long positions, hoping for price gains.
While Ethereum open interest on Deribit is at a three-year high, cumulative open interest contracts on all derivatives exchanges such as Binance, Bybit, and OKX remain within the range.
According to Coinalyze data As of May 30, there is $5.4 billion in ETH open interest on popular exchanges, which is up 2.6% over the last 24 hours.
Of this, $4.9 billion of the total open interest represents perpetual futures contracts. Meanwhile, only about $440 million is Ethereum futures contracts.
Most of these positions are open on Binance, which had $2.2bn in open Ethereum positions, $1.2bn on OKX and $1bn on Bybit. Deribit, Coinalyze data shows, has $682 million in total Ethereum open interest in the last 24 hours.
Are the ETH bulls ready?
The slight increase in Ethereum open interest could suggest that more traders are watching ETH prices closely, even positioning themselves for further gains or dips.
At spot rates, ETH prices are up 8% from May lows, approaching $2,000, a critical reaction level. The rally follows a deep pullback from $2100, last recorded in April 2023. From mid-April to mid-May, prices fell as low as $1,760 before stalling and rising to spot rates.
Overall, ETH remains within a bullish formation, rising 40% since mid-March 2023. Still, whether this trend will continue, possibly boosting the number of open interest positions, depends on whether the bulls add to their longs, forcing Ethereum prices above the psychological $2,000 level.
Featured Image from Canva, Chart from TradingView
