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This is historical. For the first time in the history of digital assets, there is a more open interest in Ethereum than in Bitcoin. Something that actually appears to be a consequence of the Ethereum The Merge blockchain update.
Ethereum’s open interest is skyrocketing!
Yesterday Glassnode noted that Ethereum’s open interest on Deribit exceeded that of Bitcoin on all exchanges. With $ 5.6 billion for Ethereum versus $ 4.3 billion for Bitcoin.
Good to know : Open interest measures the total amount placed in derivatives of a particular asset. By “selling” or “buying” an asset, a trader increases the open interest in that asset. More visually, open interest summarizes the ongoing struggle between bulls (Taurus) and bears (Orso).
At the beginning of the weekend, open interest in ETH even exceeded $ 7 billion. And hedge funds seem to be positioning themselves as the prince of cryptocurrencies. Global open interest in Ethereum options reached 7.58 billion on July 30, up from $ 2.74 billion earlier this month, according to The Block, up more than 175% in just 30 days.
If, for the first time in history, open interest in Ethereum exceeds Bitcoin, it will be for one reason in particular: an upgrade to the Ethereum blockchain. Elements that today lead some analysts to confirm that Ethereum could have an advantage over Bitcoin in the future.
Hello Switching from Proof of Work to Proof of Stake should save over 99% of assets for the Ethereum blockchain, investors seem to be betting on a successful migration.
Not to mention that Ethereum is expected to become a post-migration deflationary asset. An important element in a context where inflation flirts dangerously with 10%, both in Europe and across the Atlantic. According to the latest data, the migration is expected to take place on 19 September.
Open Interest: a tool for measuring market sentiment!
There are many tools that can be used in the trading world. If we stick to technical analysis indicators often, some data, such as open interest data, are key to understanding the market.
In particular, open interest corresponds to the fact that The value of all existing contracts for the business that have not yet been settled. In other words, open interest indicates the number of contracts held by market participants or investors who are pending. Therefore, we understand why this tool can provide some insight into market sentiment. But also the forces behind the prices.
Ethereum at $ 3,000 in December 2022?
The return of institutional lenders to Ethereum 2.0 could greatly affect the price of ETH. Joshua Lim, Head of Derivatives at Genesis Global Trading, explains:
A more recent development has been the popularity of low-premium ETH option structures by macro-discretionary hedge funds positioning themselves for a merger. A common structure could be a butterfly buy that pays out when ETH / USD closes at a spot price of around $ 3,000 in December 2022. These long-term tiered structures increase open interest in ETH options.
In any case, if Ethereum starts growing again, this asset can drag the entire cryptocurrency market with it. Ethereum has only gained 90% from its low in June last year. If we look back over the past 30 days, the token is up 49%, a level that easily surpasses Bitcoin and its + 19% in 30 days. If we are to believe various forecasting algorithms, the scenario of ETH at $ 3,000 within 6 months does not seem unrealistic.
Read also: What could change the merger for the Ethereum blockchain!