Ethereum reserves on derivative exchanges have surged to the highest level in more than a year as speculative activity rises.Ethereum’s failure to break from bearish trends stems from the lack of adequate demand to counter selling pressure. As AMBCryptoHowever, a look at the derivatives market shows a divergence. Speculative activity around ETH is at its highest level in months, indicating that derivative traders are positioning themselves for future price movements.
The rising speculative activity is also seen in the derivative exchange supply ratio, which stood at 0.09 at press time, indicating that 9% of Ethereum’s total circulating supply is held in derivative exchanges.This metric is at its highest level since April, representing a shift in market activity where derivative trading activity is playing a pivotal role in influencing Ethereum’s short-term price trends.
A rise in leveraged trading can cause price fluctuations due to forced liquidations if ETH makes unexpected price movements. Moreover, it could reinforce the bullish or bearish trend depending on how market participants are positioning themselves., showing a rise in the newly opened positions around ETH. Since the start of the month, ETH’s open interest has ballooned by more than $4 billion.
When the open interest rises and the funding rates remain positive, it shows that more traders are opening long positions than short positions. This is an indication of a bullish bias on future price movements. However, data from Market Prophit shows that the general market sentiment around Ethereum remains bearish, which could further weaken demand and prevent a bullish recovery.Mary is a seasoned crypto news writer passionate about blockchain technology, digital assets, and Web3. She has two years of experience delivering insightful analysis and news on key developments in the industry. She specializes in on-chain metrics, market behavior, industry insights, and technical analysis.