Ethereum futures volume hits record high as ETH flirts with $ 400

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Ethereum futures are more popular than ever as the volume rises as the price of ETH rises.According to Skew Analytics data. That’s an increase of more than 45% from the previous high of $ 9.6 billion set on July 27.

The surge comes as ETH prices flirt with $ 400, a milestone that is believed to represent a gain of over 160% since the start of 2020. DeFi metrics continue to grow, it is getting harder and harder every day to deny that Ethereum is in the middle of a new bull run.

Futures contracts are an agreement between two parties to buy or sell a given asset at a predetermined time in the future. Contract buyers expect the future market price to be higher than the contract price, which allows them to immediately sell the asset at the higher market price. Contract issuers profit by charging a fee when the contract is sold, hoping that the fee is greater than the gain resulting from the sale at the future market price.

Ethereum futures, aggregated daily volume. Source: Skew

Futures contracts, like options contracts, can be traded like other financial assets. The increase in the volume of futures contracts indicates that more traders want to bet on what will happen to the price of an asset in the future, in this case ETH. Panama-based Deribit offers the longest term of the futures contract, with execution expected on March 25, 2021 and a price of $ 413 at the time of writing. BitMEX provides the shortest duration with an expiration set for September 24 and a price of $ 403.

Futures trading volumes were highest on the Binance, Huobi and OKEx exchanges, accounting for almost 80% of the total volume. Of that group, OKEx saw the biggest increase in volume from previous records of all time, up more than 50% since July 27.

As the volume of transactions increases, futures contracts open interest – the real value of all outstanding futures contracts – which recently crossed the billion dollar mark are down slightly from an August 1 high of nearly $ 1.4 billion to around $ 1.2 billion on Sunday.

In the stock market, futures contracts are often used to get a rough idea of ​​the direction in which the price of an asset or commodity is heading. If the crypto follows a similar pattern, an ETH above $ 400 seems like a distinct possibility.

Warning

The opinions and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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