Key Points
The daily open interest for Ethereum futures on crypto exchanges Bybit and Binance has reached a record high.
This has resulted in a 4% increase in Ethereum’s price for the second day in a row, pushing it over $3,200.
Its market cap now stands at $387 billion.
Data indicates that among the top five derivatives exchanges, all but the Chicago Mercantile Exchange (CME) have achieved record highs in daily open interest for ether futures.
Binance, in particular, has experienced a surge in open interest, peaking at over $3.30 billion.
Bybit’s open interest has also reached $1.94 billion.
Analysts interpret this significant increase as a sign of growing confidence and participation in ether futures trading.
This highlights Ethereum’s appeal to traders who are drawn to the potential for larger returns in more volatile markets.
Increased Interest in Ethereum
Ruslan Lienkha, Chief of Markets at YouHodler, commented on this trend.
He stated, “The significant surge in open interest in ether futures indicates heightened interest from risk-oriented traders in leveraged positions seeking greater volatility.”
However, Ethereum has also been experiencing increased price volatility recently.
Over the past two weeks, Ether has seen an average daily price fluctuation of 2%, which is double that of Bitcoin’s average daily movement.
Data from The Block’s Data Dashboard shows that Ethereum’s on-chain volume has also reached a multi-month high.
Daily transaction volume on the Ethereum network has risen from a low of $1.26 billion in early October 2023 to a current multi-month high of $4.2 billion.
Expectations of potential approval for spot Ether ETFs this spring, along with the upcoming Dencun upgrade, are further boosting on-chain activity, according to Lienkha.
The Dencun upgrade is set to introduce functionalities like blob transactions and transient storage.
This upgrade will enable the use of off-chain “data blobs” to incorporate additional data into Ethereum transactions without causing delays in block processing times.
The Dencun upgrade is particularly significant for all Layer-2 DeFi tokens on Ethereum.
The EIP-4844 proposal that will be implemented with the Dencun upgrade aims to reduce the transaction fee for all Layer 2 protocols.
As a result, most of the L2 Defi tokens on Ethereum have seen strong price gains recently.
In a research report, Bernstein analysts Gautam Chhugani and Mahika Sapra noted, “With the growth of ETH transaction fees based on higher blockchain activity (more DeFi, NFTs, tokens), more ETH holders are incentivized to stake their ETH. And as financial smart contracts on Ethereum Layer 2 networks scale (Arbitrum, Optimism and Polygon), more ETH finds itself locked in smart contracts, leading to a reflexive feedback loop of increased demand.”
At present, the total ETH held on exchanges is at a record low of just 11% of the total supply.
A large portion of ETH remains locked in DeFi smart contracts, staking pools, and other Layer-2s.
