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Ethereum Flags Stake Above $3.2K Nudging Ahead Of Bank of America, PayPal

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Ethereum [ETH] finally broke the psychological barrier of $3K in May this year. The crypto-asset rose to a new all-time high above $3,200 today after a challenging week as it broke away from the consolidation camp. With this, Ethereum has not just flipped Bank of America [BOA] but has also surpassed payment processing giant, Paypal in terms of market cap.

After posting nine consecutive green candles, the market cap of the second-largest cryptocurrency surged to $365 billion. In contrast, BOA and PayPal’s valuations were found to be at $307.99 billion respectively.

ETH

ETH has established plenty of peaks this year. But the latest one was crucial since it came at the backdrop of a rather dull market movement. The trading volume has intensified over the past week that further pushed the coin to explore new heights.

The co-founder of the Ethereum blockchain, Vitalik Buterin has now officially become a crypto billionaire. If the 27-year old’s public Ether address has reached $1 billion on its balance after the token’s exponential growth on Monday.

Ethereum’s Price Explosion Has Found Substantial Backing

Ethereum’s on-chain fundamentals also turned bullish which further strengthened its upward momentum. The whales have continued to buy dips and the latest whale accumulation has backed the digital asset’s surge. In addition, the decline in the network’s gas fee has been somewhat of a relief for the ecosystem.

Moreover, the increasing active addresses, as well as transaction figures, have boosted Ethereum its rally to new highs.

Upon taking the derivatives realm into consideration, it was found that the open interest OI] across Ether options markets has significantly risen this year. The OI stood near $4 billion and the figure was up from a little $800 million at the beginning of 2020.

Also, the CME’s ETH futures market grew from an OI of $68m on the 1st of March well above to $370 million in just two months. The average open interest across Ether futures had soared to a fresh ATH of $8.6 billion recently.

Here’s Why Ethereum Could be Primed for Further Gains

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At a value of $462.18, Ethereum has climbed to levels not seen since July 2018. The incredible build-up was spun by the exploding popularity of decentralized finance [DeFI] as well as by the long-planned upgrade – Ethereum 2.0.

Ethereum’s rally has just begun and the following reasons indicate why the largest altcoin could see more gains in the coming days

Strong HODLing trend

Ether has enjoyed highs that that was last seen two years ago and the holders are anticipating a little more. This was evident from the latest Glassnode chart which showed that ETH held on exchanges has followed a consistent downtrend since mid-August. Conversely, the total supply held off exchanges has risen significantly. Meaning, holders were currently in an accumulation spree.

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The upward price action has also resulted in the rise of mean transaction volume which climbed to a 5-month high of 0.236 ETH. Among other things, the number of active addresses has also increased substantially.

In addition, more than 93% of the current supply of ETH is now considered “in the money”. This was according to the charts of data analytic site, IntoTheBlock, which revealed that a significant chunk of addresses were in profit.

IntoTheBlock

More Calls are being bought versus Puts

skew eth putcall ratios

Gauging at the derivatives space, a sense of optimism was found to have taken over the traders. The decline in the put-call open interest ratio, which hit to a 3-month low, was indicative of this. According to the above Skew chart, the figures declined to 0.77 points which implied that the market is more bullish as investors were buying more calls in anticipation of a bull run ahead.

Bullish Futures Market

skew eth futures annualized rolling 1mth basis

Another crucial indicator to understand the investor sentiment is by looking at futures markets premium to perpetual and swaps. The 3-month annualized premium appeared to be above 14%. Also, the 1-month futures contracts are trading above an annualized premium of 20%, indicating that buyers are betting that ETH’s spot price will surge in the near future.

Strong technicals

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The technicals in ETH’s daily chart aligned with bullish momentum. Looking at the above chart, it can be noted that the daily moving averages acted as crucial support points for the ETH price candles from further decline. Interestingly, after undergoing a golden cross, the 50 DMA [Pink] has not only followed the price appreciation, but also the gauge with the 200 DMA [Purple] has risen, which was further indicative of an increasing positive price sentiment.

The RSI was well above the 50-median neutral zone but has so far not exhausted the buying pressure. This essentially depicted a bullish sentiment among the traders in the market.

Ethereum Price Surge Drives Ethereum futures Open Interest to a Record High

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For the first time in history, the gross figure of the open Ethereum’s futures contract eclipsed $1 billion, another sign of surging open interest in the second-largest cryptocurrency. The total value of all open bets in the value of Ethereum hit a new all-time high, as per data by blockchain analytics firm, Skew.

Ethereum futures

The new record comes as ETH ‘s price broke past the $300 price level and the imminent launch of Ethereum 2.0, which has boosted long-term investor trust in the potential of cryptocurrency. Future contracts refer to the consent of two participants to buy or sell a particular asset at a set price at a predetermined time in the future.

The buyers of the Ethereum futures contract anticipate the value of ETH will be different from the value of the contract before it is deployed, allowing for immediate proceeds upon completion of the commitment. Notably, the entities issuing futures contracts earn a fee referred to as premium, with the anticipation that the fee will be higher than the loss

Total Ethereum futures open interest surge by 30 percent

Total open interest in Ethereum futures surged by nearly 30 percent from June 20, from below $800 million to about $1.2 billion during press-time. Open interest is a very significant metric because it shows the fresh amount both issuers and traders have gambled in futures contracts before the expiry of the contract in the future.

Moreover, major crypto exchange OKEx is currently leading the pack with the most extensive Ethereum futures open interest of over $290 million. Crypto exchanges Huobi and BitMEX follow behind with $220 and $216 total open interest, respectively. In particular, Huobi recently revealed its plan to roll out Ethereum options trading later during Q3.

Ethereum leading the new market charge

Ethereum futures were surging earlier in the year, reaching almost $900 million before the coronavirus pandemic fears increased, and the further collapse of the U.S stocks market brought down the cryptocurrency market with it. The open interest in Ethereum futures crashed to below $400 by mid-March. However, the gross value of Ethereum futures open interest has been on a determined surge upwards since then.

The current momentum has been driven by the recent increase in the price of Ethereum. Nevertheless, the surging Eher future has more work to do if they match the king of the cryptocurrency futures contract, Bitcoin. Back on July 21, the open interest in bitcoin futures eclipsed the $4 billion mark. However, BTC futures contracts have raised at half the rate seen by Ethereum futures since the price began surging.