The Ethereum network is at a crossroads right now with PoS incoming and retail and institutional adoption peaking. The ecosystem is finally integrating much-needed functionalities that can fully implement its technology’s use cases. In fact, with London going live yesterday, many in the community expect ETH to hike over the next few months.
The ETH spot market registered some high-volume trading over the last couple of days. What’s more, the Futures market is following a similar pattern too. In fact, Futures trading hit a monthly peak on 5 August. At this point, it would seem that Ethereum Futures might indicate where the market will go next.
The state of the Futures market
Ethereum Futures’ perpetual funding rate hit its one-month peak on 4 August. A high positive funding rate suggests that the price of a perpetual contract is higher than the Mark price. Thus, traders who are long pay for short positions.
Despite minor corrections on the four-hour chart for ETH, Futures volume was up at press time. This, again, is a sign that people are probably hedging for the market.
Source: Glassnode
Furthermore, over the last 24 hours, volumes have risen by almost $6 billion on Binance alone. Other major exchanges recorded high figures as well. Open Interest on all exchanges peaked too.
High Open Interest usually means that there are many contracts still open – A sign that market participants will be watching the market closely.
Source: Skew
That being said, Options volume suggested that calls were dominating puts. By implication, more people seem to be anticipating a price hike, rather than a fall.
Over the previous day alone, the former was represented by 9955 DBT hedging for Ethereum’s price to go up to $50,000 by March 2022.
Now, even though the ETH/BTC realized volatility spread noted a minor hike on the three-month chart, it can be considered notable because of the simultaneous rise in BTC’s price. However, the rise in the same, at the time of writing, as the metric read 43% meant that ETH’s price was pacing up in comparison to BTC.
Source: Skew
A surprise in store?
While all this might look pleasing and on the face value it sure is, it is notable that a recent Santiment report pointed out how social sentiment and activity on the ETH network have been flashing contradictory signals. With social sentiment and dominance peaking alongside low active addresses, ‘the crowd is more talking (social dominance) than doing (active addresses).’
In such a situation, it is best to watch the market for a few days as the market could have a surprise for all. Either way, it does seem like there is a lot of volatility, looking at the bullish expectations both in the Futures and spot market.