Ethereum Futures Overshoot BTC’s Futures Briefly After Reaching Record $10B

ByTroy Morris

May 6, 2021

In the last 30 days, the price of Ether left BTC’s behind to record about a 67.5% increase while the crypto market king seems stalled. On May 5, ETH reached a new all-time high of $3,605, and this was responsible for the boost the futures of the asset received to record $10 billion in open interest.

This market movement began to raise crucial skepticism as BTC dominance, and its derivatives markets seem to be under a serious threat currently. On the 4th of May, the aggregate volume of Ether’s futures rose past that of BTC for the first in cryptocurrency market history.

Data trending in the community revealed that on May 4, about $2.6 billion CME Bitcoin futures along with $1.1 billion Ether futures in CME traded. The aggregate volumes of Ether’s, however, rose to $87 billion compared to $81 billion of BTC’s.

Some analysts may raise an argument that open interest is more relevant than trading volumes which, of course, is a fair approach to assessment. Open interest shows the aggregate number of contracts in the market irrespective of being traded on a particular date. In that approach, the open interest of BTC is still two times that of Ether.

The Soaring Volume of Ether’s Futures Shows A Rising Interest from Market Traders

To analyze if the market will go bullish or not, the premium needs to be analyzed. The premium will reveal the gap between the price of the futures contract and the normal spot market. This market indicator is referred to as basis and, on normal circumstances, should read a 10-20% annualized premium.

The lending rate of the stablecoin is the major reason for this disparity as the participants in the futures markets are holding on to their settlement by going for derivatives contracts.

The 3-month range of Ether futures basis charts from OKEx revealed that the futures premium rose to 45% in the middle of April and has gone back to normal since (about 25%). This data is quite encouraging as it reveals that there is no abnormal optimism despite in back-to-back all-time highs the ETH price reached.

On a general note, the market of Ether’s futures seems to be recording a healthy growth irrespective of how the data is interpreted. As for the eventual overtaking of BTC open interest, it seems it will take a long while for that to happen. But either way, the growth of crypto derivatives is healthy for the crypto market generally.

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