Explanation of the sudden inflows into Ethereum futures contracts

Ethereum is a second generation cryptocurrency in the opinion of many as it brought some of the most desperately needed features to implement blockchain technology use cases. With the introduction of PoS and increasing acceptance in retail and institutions, it is expected that the value of ETH will increase exponentially in the future.

However, it appears that Ethereum futures are in a better position than the future of Ethereum. Here’s how –

Future of Ethereum Futures

In the past few days, money has migrated from spot trading to ETH futures contracts. Observing the metrics shows that a sudden drop in ETH stock market balances suspiciously coincided with the rise in futures volume. This phenomenon was observed on all stock exchanges.

Although the ETH net balance has been falling on the exchanges for some time, the sudden drop in the past few days corresponds to the rise on the derivatives chart.

Ethereum’s balance on exchanges continues to decrease | Source: Glassnode – AMBCrypto

This can be confirmed by the indicator of net transfer volume from / to exchanges, which, despite a solid recovery, represented a slight decline. Movement below the 0 line is an indication that money is leaving the exchanges. But it was the sudden surge in futures indicators that showed where that money was going.

Ethereum volume transferred from exchanges | Source: Glassnode – AMBCrypto

This becomes clear when looking at the futures volume across exchanges.

Despite the drop in prices, the volume of futures had increased, a sign that people are likely to be hedging for the market right now. Additionally, those volumes have increased nearly $ 12 billion in the past 24 hours on Binance alone. The numbers for Ethereum have also increased on every other major exchange. And if that’s the case, it could be pretty beneficial for Ethereum as the altcoin has made some big headlines lately.

Sudden increase in ETH futures volume | Source: Glassnode – AMBCrypto

What explains the increase?

The sudden surge in futures contracts could be the result of several large moves that have taken place in the case of Ethereum. First up is Goldman Sachs’ announcement regarding the offering of options and futures trading for Ether.

The bank also said in a recent note that

“For now [Ether] looks like the cryptocurrency with the highest real usage potential, since Ethereum, the platform on which it is the native digital currency, is the most popular development platform for smart contract applications. “

The fuel for this fire was Brazil’s announcement that it would approve the first Ethereum ETF in Latin America in the form of QETH11. These reasons must have increased people’s interest in the future of the coin more than in its present state.

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