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The trading volume of ETH Futures is up 38% in 2 days, at the time of writing, according to Skew’s charts. Not only the trading volume, but also the Open Interest increased 8% according to Skew’s charts. On the spot exchanges, the volume of trading decreased by almost 25%, but on the derivatives exchanges it increased. This result implies increased volatility and fear of a short-lived price correction and rally as traders are inclined to trade derivatives, but not the underlying asset in spot trades.
ETH futures aggregate daily volume || Source: Skew
Based on Skew data, the increase in volatility in ETH and the fear of correction that is evident from the volume of trading on derivatives trading, ETH may be awaiting correction. Retail traders are more likely to trade the derivative rather than the underlying asset. ORIn the spot markets, in addition to trading volume, there are other indicators such as volatility and outflows. Both the volatility and outflows of ETH on spot trades have increased and the narrative driving ETH’s price may be the narrative of scarcity, rather than the correlation of the crypto-asset with BTC.
At the time of writing, the price of ETH had reached a high of $ 465.68, after opening at $ 454, which was a 14.47% increase in the weekly price. As noted above, ETH price volatility has increased and at the same time ETH outflows from spot exchanges have increased. Additionally, the number of outbound transactions has also increased, according to Cryptoquant data.
ETH outflow transactions || Source: Cryptoquant
The volatility of the price is high due to the increase in the number of outgoing transactions, however it could be short lived, just as retail traders fear. This could be another reason why more activity has been recorded on derivatives exchanges, compared to spot exchanges. The scarcity narrative is supported by Vitalik Buterin’s bullish tweets two days after ETH’s mainnet launchpad was released. The founder of ETH reminded everyone that being online even 60% of the time is profitable.
Source: Twitter
Indeed, the current ETH price rally may be in response to the launch of the launchpad, and sentiment may have turned bullish in response. The launchpad takes the ETH community one step closer to delivering ETH 2.0, its long-awaited update. Furthermore, the sentiment of retail traders is evident from the growing number of non-zero portfolio addresses on the ETH network.
This was confirmed by Glassnode after sharing an update on non-zero wallet addresses.
Source: Twitter
Ergo, it can be inferred that more retail traders are active on ETH now, with the number of non-zero wallet addresses reaching an ATH of 49,014,477. Such a development suggests that ETH has captured traditional institutional and retail interest and a rise in ETH prices is likely to occur. While the current price rally may be short-lived based on the charts and trader sentiment, ETH traders may find themselves in a long-term rally.
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