Ethereum Open Interest On Deribit At A 3-Year High

Ethereum open interest for perpetual futures contracts on Deribit, a crypto derivatives exchange, is at a three-year high, Glassnode data on May 30 reveals. 

Perpetual futures are a kind of derivative that tracks the performance of an underlying asset, in this case, Ethereum, allowing traders to not only “buy” but also short-using leverage. These financial derivatives allow investors to gain exposure to the underlying without buying or selling it directly. 

Ethereum Open Interest On Deribit At A Three-Year High

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 surpasses $542 million, recorded on April 20, 2023.

Open interest tracks the total number of open positions recorded in a trading platform. These positions or contracts have not been settled, meaning traders have left them open, expecting the price to move in or against their order.

Often, the size of open interest in any crypto derivatives exchange can be used as a sentiment indicator, showing the level of interest in a particular asset.

For instance, increasing open interest in a market that has not been impacted 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, expecting price gains.

While Ethereum’s open interest in Deribit is at a three-year high, the cumulative open interest contracts across all derivatives exchanges, like Binance, Bybit, and OKX, remain within range.

According to Coinalyze data on May 30, there is $5.4 billion in ETH open interest across popular exchanges, representing a 2.6% increase in the last 24 hours.

Out of this, $4.9 billion of the total open interest represents contracts from perpetual futures. Meanwhile, only about $440 million are contracts from Ethereum futures. 

Most of these positions are open on Binance, which had $2.2 billion in Ethereum open positions, $1.2 billion in OKX, and $1 billion on Bybit. Deribit, Coinalyze data shows, has $682 million in total Ethereum open interest in the past 24 hours. 

Are ETH Bulls Ready?

The slight increment in the Ethereum open interest could suggest that more traders closely watch ETH prices, even positioning themselves for further gains or drops. 

At spot rates, ETH prices are up 8% from May lows, increasing closer to $2,000, a critical reaction level. The recovery follows a deep retracement from $2,100, last registered in April 2023. From mid-April to mid-May, prices dropped to as low as $1,760 before flattening and rising to spot rates.

Overall, ETH remains within a bullish formation, rising 40% from mid-March 2023. Even so, whether this trend will continue, possibly driving the number of open interest positions, depends on whether bulls add to their longs, forcing Ethereum prices above the psychological $2,000 level.

Feature Image From Canva, Chart From TradingView