Ethereum struggled to sustain any significant move higher over the past week. Although the second largest cryptocurrency has regained the $3,300 price level, it could not rise above $3,400 to continue its path to higher price levels. As it stands now, it appears that the Ether token is adopting a bearish structure in the short term. However, an on-chain assessment has recently been published, showing that market participants may be gearing up for a major move in the near term.
Ethereum Futures Activity Hits Monthly High After Market Inactivity
In a recent one QuickTake post On the CryptoQuant platform, analytics group Arab Chain reveals that there has recently been a spike in futures trading on the Binance derivatives market. This disclosure is based on the Binance: ETH Futures Daily Volume metric, which monitors the total value of Ethereum futures contracts traded on Binance each day, reflecting market activity, trader participation, and potential leverage exposure.
The latest reading of the metric has revealed a major shift, with trading volume rising to $21.7 billion. According to Arab Chain, this reading marks the highest level since mid-December, indicating that strong momentum has returned to the futures market.
Notably, the peak in futures trading volume was preceded by a period of relative decline in the second half of December. This event coincides with a period of price stability, in addition to declining risk appetite among traders. Interestingly, institutional investors also contributed to the prevailing risk aversion. Arab Chain explains that the decline is a typical sign that market participants want to ‘wait and see’, rather than speculatively opening large positions.
However, the current scenario – in which futures volume soared – paints a contrary story. With futures trading volume reflecting levels above the mid-December high, it is clear that interest among Ethereum traders is being reignited. This is because increasing futures volume is “typically associated with higher use of leverage, hedging activities and speculative positioning” – a setup that signals the market is preparing for significant moves.
The reason for this spike can also be attributed to traders reacting to key technical levels or shifting their expectations around short-term price action from a potential trend reversal. In the big picture, however, Ethereum price responds to this activity depending on the alignment of spot demand with derivatives activity. Until such a definitive sign occurs, the market is at a point of uncertainty.
ETH price overview
At the time of writing, Ethereum is at a price of $3,292, which does not reflect any real growth since the past day.