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7月 29, 2020

Open futures contracts hit a record high, can Ethereum become the king of the bull market again?

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Recently, with the repeated record highs of gold and silver prices, Bitcoin, known as “digital gold,” has also lived up to expectations and stood above the $10,000 mark. With the rise of mainstream currencies and altcoins, the cryptocurrency market continues to strengthen, becoming a beautiful landscape.

In this wave of bull market performances, there is no doubt that Ethereum is at the forefront of the team. On July 25th, ETH started to skyrocket, leading the rise of mainstream coins all the way. Until July 28th, ETH set a new high for the year, reaching a maximum of $333, which is only $33 from the 2019 high of $366.

Is the crypto bull market really coming? How much room does Ethereum have an upside? Can you take the title of “Bull Market Engine” again?

Ethereum futures open positions hit a record high

According to data from the market analysis company Skew, the total value of open positions in Ethereum futures has exceeded the $1 billion mark, a record high.

ETH futures began to rise at the beginning of 2020, and the total amount is close to 900 million US dollars. However, under the influence of the new crown epidemic and the crash of the U.S. stock market, the cryptocurrency market “fallen”. By mid-March, the open position of Ethereum futures had fallen to less than $400 million. However, spurred by the recent rise in the price of Ethereum, the open interest of Ethereum futures has continued to rise.

Since June 20, the open interest of Ethereum futures has increased by nearly 30%, from less than $800 million to nearly $1.1 billion. The open interest is an important indicator because it measures the original amount of the issuer and buyer in the futures contract that is still at the expiry date. In contrast, futures trading volume measures the value of existing futures contracts (which can be swapped like any other derivative) that are being traded in a given period. The cryptocurrency exchange OKEx currently maintains the largest open position at more than $290 million.

A futures contract is an agreement between the two parties to buy or sell a given asset at a fixed price at a predetermined time in the future. The contract buyer expects the price of the asset (such as ETH) to be different from the contract price at the time of execution so that it can obtain immediate profits when fulfilling its obligations. Contract issuers earn a fee from the contract they sell, called a premium, which is expected to be greater than the loss of buying or selling assets to fulfill their obligations.

Although Ethereum futures are on the rise, they still have a long way to go compared to Bitcoin. The open position of Bitcoin futures broke the $4 billion mark on July 21, but it is worth noting that since the recent price rise, the open interest of Ethereum futures has increased by 2% of Bitcoin futures. Times. As Ethereum begins to lead a new market cycle, the value of open positions in Ethereum futures may soon surpass Bitcoin and become an asset that deserves more attention.

With the skyrocketing price of ETH and the recent smooth progress of Ethereum 2.0, investors are full of confidence in the long-term potential of the decentralized protocol, which is a milestone. Futures contracts belong to the field of more complex and professional traders, which shows that “Smart Money” is very optimistic about the next development direction of Ethereum.

So, can Ethereum keep advancing all the way and become the king of this bull market?

Can the “King of the Bull Market” continue its rally?

Although investors have been looking forward to this round of bull market for a long time, they have to say that the price of Ethereum has exceeded most people’s expectations.

ETH/USD K-line chart source: OKEx

According to the OKEx ETH/USD market, as of July 28, the price of Ethereum hit a maximum of $333, which is only $33 from the 2019 high of $366. Ethereum has skyrocketed by 40% in the past 7 days, which is reminiscent of the strength of Ethereum in the 2017 bull market.

However, behind the skyrocketing, some indicators have inevitably undergone significant changes.

According to Santiment’s analysis, the price increase of Ethereum led to the lack of daily active addresses for the first time since June 17, and the lack of daily active addresses usually means that a callback may occur. However, the current such strong momentum of Ethereum may also herald a consolidation in a higher position.

It should be noted that the lack of daily active addresses does not mean a decrease in active addresses, but indicates that the price of Ethereum is much higher than the speed at which active addresses enter the network. A few weeks ago, the number of active addresses in Ethereum exceeded 500,000 (7-day moving average), which was the first breakthrough since the 2017 ICO boom.

Ethereum transaction volume & number of active addresses in 2020 Source: Coinmetrics

Whether it is the strong price trend of Ethereum or the surge in usage of the Ethereum network, it is undeniable that Defi is the huge driving force behind it. But at the same time, due to network congestion and the soaring transaction costs, the number of active addresses on Ethereum has declined.

According to the latest research on Defi by Xangle, a global cryptocurrency asset disclosure platform, the transaction volume, and fees of the Ethereum network have seen a huge increase in the second quarter of 2020. The daily ETH transaction volume soared by 61.7%, and the transaction volume exceeded 1 million; another, On the one hand, transaction fees soared by 687.9%. Xangle said that this volatility is extremely close to the peak during the bull market in late 2017 and early 2018.

The open positions of Ethereum futures hit a record high, and the volume of Ethereum network transactions continues to soar. Is this a harbinger of a big bull market? In addition, according to previous media reports, Ethereum 2.0 is expected to be launched in November, coupled with the blessing of the Defi market, can ETH set a new bull market record again?

The market imagination before our eyes is infinite.

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