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Bitcoin and Ethereum Futures Activity Diverges, Signaling Market Shift

Published
Valdrin Tahiri
Published
By Valdrin Tahiri
Edited by Ryan James

Key Takeaways

  • Bitcoin’s (BTC) futures open interest reached a new all-time high this week.
  • Ethereum’s (ETH) open interest is nowhere close to its previous highs.
  • Institutional interest dominates Bitcoin metrics but not Ethereum’s

Traders use futures contracts to speculate on the future price of an asset and enable them to use leverage in their positions. With futures contracts, they can gain exposure to an asset without directly holding it.

The CME Group is the leading futures market for institutional investors.

With this in mind, we will analyze Bitcoin’s and Ethereum’s futures trading environments to see what they reveal about the current state of the market.

Bitcoin Futures Open Interest

Bitcoin’s derivative market has grown tremendously since 2016, when the first perpetual swaps were made available. These methods have added more sophisticated trading strategies to Bitcoin, creating more depth and liquidity.

The increase in leverage is visible this week since the futures open interest reached a new all-time high of $34.2 billion on Oct. 20.

The previous all-time high  was slightly below $30 billion in 2021.

Futures Open Interest
Bitcoin Futures Interest | Credit: Glassnode 

While the interest in perpetual futures is considerable, the all-time high was driven primarily by the fixed-term contracts of the CME Group , which have over $10 billion in volume in the past 24 hours. Binance is second with $8 billion.

Nevertheless, it is interesting that despite this increase in future open interest, the volume is nowhere close to the all-time highs of March.

At the time, the Bitcoin price also reached its all-time high. Using a 7-day moving average, volume packed at $87 billion in March but is currently at $35 billion.

Bitcoin Futures Volume
Bitcoin Futures Volume | Credit: Valdrin Tahiri/Glassnode 

So, the dominance of the CME Group highlights how everpresent institutional investors are in the current market. The difference between volume and open interest could be attributed to the sideways market since traders may have kept their open positions, increasing interest but not entering new trades.

Ethereum Futures Open Interest

While Bitcoin reached new highs, the Ethereum picture is completely different. While futures open interest reached its yearly high of $15.8 billion in June, it is currently at $11 billion.

One reason for this could be that the ETH price has traded downward instead of sideways, causing traders to close their trades. Unlike Bitcoin, Binance dominates the open interest .

The CME Group ranks fifth behind Binance, Bybit, OKX, and Huobi and has a fifth of the interest in Binance.

Ethereum Open Interest
Ethereum Open Interest | Credit: Valdrin Tahiri/Glassnode 

The volume picture is more similar to Bitcoin, except Ethereum’s volume spiked in June, reaching a new yearly high slightly above that in March.

The total futures volume is just above $14 billion, well below the all-time high of $39 billion.

Ethereum Futures Volume
Ethereum Futures Volume | Credit: Valdrin Tahiri/Glassnode 

So, Ethereum’s derivatives metrics are different from Bitcoin’s because they have less interest. Also, individual traders dominate Ethereum futures while institutions lead in Bitcoin.

Bitcoin vs Ethereum

The analysis of Bitcoin’s and Ethereum’s derivative metrics shows that the former leads in almost every metric, and its open interest has reached a new all-time high.

While there is considerable institutional interest in Bitcoin, the same is not true for Ethereum.

Disclaimer: The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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