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  • Ethereum CME Open Interest, Why Trading Volume Ballooned

    Ethereum CME Open Interest, Why Trading Volume Ballooned

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    Ethereum has been slowing down on its bullish momentum. The second cryptocurrency by market cap trades at $3,066 with a 4.2% loss in the daily chart.

    Ethereum ETH ETHUSD
    ETH moving sideways in the daily chart. Source: ETHUSD Tradingview

    After two weeks of profits and an incredible rally from the low at $2,000, mostly driven by the implementation of EIP-1559, Ethereum could see some downside in the short term.

    The In/Out of the Money Around Price (IOMAP) metric, used to measure the average purchase price of a crypto asset and compared it to its current price, from IntoTheBlock suggests Ethereum sits at “stable support”.

    Analyst Ali Martinez shared the chart below and indicated that over 230,000 addresses bought 7,33 million ETH between $2,970 and $3,080. Thus, ETH’s price must hold above these levels to prevent a bearish trend in the short term. Martinez added:

    Any downswing below this price range could encourage investors to book profits quickly before their investments go “Out of the Money.”

    Ethereum ETH ETHUSD
    ETH’s price IOMAP. Source: IntotheBlock via Ali Martinez

    One of the key drivers for Ethereum has been institutional adoption that sees great potential in its ecosystem. Additional data provided by Arcane Research suggests adoption is still on the rise with ETH-based derivatives on the rise.

    The research firm has recorded an increase in open interest (OI) for Ethereum futures on the Chicago Mercantile Exchange (CME). The ETH trading volumes have been gaining dominance and stand at around 30% of Bitcoin (BTC) and the open interest at 27%.

    The OI of CME’s EH futures currently sits at an all-time high of $650 million. The OI of the bitcoin futures sits at $1.8 bn but is down substantially from its Feb 18th peak of $3.3 billion. Ether futures now account for 26.5% of the total OI in CME’s crypto futures.

    Ethereum ETH ETHUSD
    Source: Arcane Research

    Ethereum Takes Market Share Away From Bitcoin

    The OI also suggests that institutions are “eagerly” building up their Ethereum (ETH) positions at the moment, Arcane Research said. Most likely, a consequence of the EIP-1559 and the expectations of future appreciation due to the network’s new fee model.

    ETH ETHUSD
    Source: Arcane Research

    As the chart shows, ETH futures trading volume has been on a rise since mid-April 12 and only slow down during May and July’s crypto market crash. During this time Ethereum went as low as $1,650 but was able to quickly recover both in price and in the aforementioned metric.

    The daily trading volume of the CME ETH futures has also seen a significant uptick in market share recently. On Friday, Aug 13th, the trading volume of the ETH futures accounted for 33% of the total trading volume in CME’s crypto futures. With the increased dominance of the ETH futures and the growing contango, a bullish sentiment around ETH among institutional investors seems to be brewing.



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  • CME Micro Bitcoin futures surpass 1M contracts as institutional speculation grows

    CME Micro Bitcoin futures surpass 1M contracts as institutional speculation grows

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    Institutional exposure to cryptocurrencies via derivatives continued to grow in the second quarter, as CME Group’s newly launched Bitcoin (BTC) micro contract received considerable uptick in its first two months of trading. 

    Since launching on May 3, CME’s Micro Bitcoin futures contract has already surpassed 1 million contracts traded, the Chicago-based derivatives market announced earlier this week. CME executive Tim McCourt said the new product has been popular among institutions and day traders seeking to hedge their spot Bitcoin price risk. 

    Denominated at 0.1 BTC, the micro contract is one-tenth the size of one Bitcoin. By comparison, CME’s main Bitcoin futures contract unit is 5 BTC.

    “We’ve seen more institutional volume than we anticipated, which shows that the timing was right for a smaller bitcoin contract,” said Brooks Dudley, the global head of digital assets at ED&F Man Capital Markets.

    Related: ‘Bitcoin will go all the way to $160,000 this year,’ says Celsius CEO

    Institutions have reduced their long-term exposure to Bitcoin and other cryptocurrencies during the latest correction, with outflows totaling $79 million last week, according to CoinShares data. In the case of BTC, newly liquidated coins are being scooped up by long-term holders who remain convinced in the long-term prospects of their investment.

    More activity in the derivatives market suggests traders are hedging their positions, speculating on the short-term directional movement of Bitcoin or both. Although derivatives trading has increased institutional exposure to Bitcoin, it has also become a source of stress for spot holders. As Cointelegraph reported, Friday’s $6 billion in Bitcoin and Ether (ETH) expiries created considerable friction in the market, with some traders expecting extreme volatility.

    The Bitcoin price mostly traded between $30,000 and $35,000 last week. Source: Cointelegraph

    High volatility was reported in the latter half of the week, with the BTC price falling 13.6% peak-to-trough between June 24-26.