During the week, Ethereum struggled to sustain any significant upward movement. Although the second-largest cryptocurrency regained the $3,300 price level, it could not break above $3,400 to continue its path towards higher price levels. In the current situation, the Ether token appears to be adopting a short-term bearish structure. However, an on-chain assessment was recently published that suggests that market participants may be preparing for a significant move in the near future.
Ethereum futures activity hits highest level of the month amid lack of market activity
In recent QuickTake post on the CryptoQuant platform, Arab Chain research group reveals that there has been a recent surge in futures trading activity on the Binance derivatives market. This finding is based on the Binance: ETH Futures Daily Volume indicator, which monitors the total value of Ethereum futures traded on Binance each day, thereby reflecting market activity, trader participation and potential leverage exposure.
The latest reading of this indicator highlighted a fundamental shift, with trading volume increasing to as much as $21.7 billion. According to Arab Chain, this reading is the highest level since mid-December, reflecting the return of forceful momentum to the futures market.
It is worth noting that the augment in the volume of futures trading was preceded by a period of relative decline in the second half of December. This event coincides with a period of price stability and dwindling risk appetite among traders. Interestingly, institutional investors also contributed to widespread risk aversion. Arab Chain explains that the decline is a typical sign that market participants want to “wait and see” rather than speculatively opening immense positions.
However, the current scenario – where futures volume has skyrocketed – tells the opposite story. As futures trading volume reflects levels above the mid-December high, it is becoming evident that interest among Ethereum traders is growing again. This is because increasing futures volume “is typically associated with greater use of leverage, hedging activity and speculative positioning” – and this situation indicates that the market is preparing for a significant move.
The reason for this spike can also be attributed to traders reacting to key technical levels or changing expectations for short-term price action of a potential trend reversal. However, in the grand scheme of things, Ethereum’s price reacts to this activity, depending on how spot demand matches derivatives activity. Until such a clear signal emerges, the market is at a point of uncertainty.
ETH price overview
At the time of writing, Ethereum is trading at $3,292, which does not reflect any real augment from the previous day.
