Ethereum (ETH) option market is experiencing an explosive growth and apparently takes ETH rally to its annual high level.
Since the beginning of the second quarter of 2020, Ethereum has seen an upward trend. The data show that the ETH option market is one of the main catalysts of the rally. Deribit Insights, the research arm of one of the best options exchanges, said:
“ETH option volumes break the all-time high with 3: 2. Put trading transactions, 1 million volume bounces from 52% to 67%. ”
Compared to February 2020, when the price of ETH fell below $ 290, the funding rate of futures exchanges is significantly lower. This shows that retail demand from the spot and option markets has fueled ETH rather than futures.
A More Stable Rally
The term funding refers to a mechanism that encourages long or short-term shareholders in the market based on market sensitivity. If there are more longs in the market, short owners are encouraged or vice versa.
In February, the financing rate of Ethereum futures ranged from 0.1% to 0.2%. This time 0.06% in BitMEX. This indicates that the ongoing rally of the futures market is not the main driver. The futures market can make a rally more vulnerable to corrections, as it allows up to 100 times the leverage in many exchanges. Currently, market data such as volume and open interest show that much of Ethereum’s demand comes from the spot and option market.
If the funding rate of the Ethereum futures contract remains close to the average rate, it may create a more stable uptrend in 2020.
Why is Ethereum Increasing?
The biggest basic catalysts that have supported Ethereum since June are the apparently booming DeFi industry and the expectation of ETH 2.0. Due to the increased user activity in DeFi protocols, the demand for ETH as gas has increased. User activity is high as the Ethereum blockchain network starts to clog.
Bobby Ong of CoinGecko COO explained:
“The high gas price in Ethereum will be here until the scalability solutions everyone is talking about are implemented. The 100 gwei process will stay here for a while. DeFi efficiency breeding also excludes all other non-DeFi activities in Ethereum. ”
As a result, miners’ revenues have increased, indicating that the number of transactions on the Ethereum network is growing rapidly.
Researchers at Glassnode said:
“Ethereum miner income is rising and is at an all-time high (7d MA). On the hourly chart, we see that more than a third of the #ETH miner’s revenue now comes from wages rather than subsidies, which was less than 5% in April. “