Christie’s to auction 9 rare CryptoPunks, Meitu completes crypto investment plan
ETH derivatives data shows uncertainty ahead of Ethereum 2.0 upgrade
A partnership between OKEx and skew has made ETH derivatives trading data accessible to the public, offering new tools for greater insights.
While Bitcoin (BTC) is the de facto market leader in the cryptocurrency space, another digital asset that has survived tough market cycles and reshuffling of ranks is Ether (ETH). Where a majority of digital assets are either driven solely by marketing hype or fall in the "vaporware" category, the Ethereum network has popularized most innovations we see in the crypto space today.
Be it decentralized exchanges, automated money markets, autonomous organizations or any of the hundreds of decentralized applications built on the network, Ethereum has single-handedly made blockchain technology much more accessible. In fact, the network has been instrumental in launching entire niches, such as coin offerings (ICOs/STOs/IEOs, etc.) and the more recent decentralized finance.
As the total value locked in the Ethereum network continues to grow and the launch of Ethereum 2.0 nears, interest around ETH is naturally increasing. In order to facilitate traders and analysts, OKEx has once again collaborated with analytics firm skew to publicly share data from its ETH futures and ETH options markets.
The new OKEx Ether dashboard on skew will go live today, and in this article, we will go over a couple of the charts available to market participants as a result of this partnership. For a more thorough introduction to OKEx derivatives data, readers can view our guide to the Bitcoin derivatives dashboard.
OKEx ETH futures and options charts
The OKEx ETH derivatives dashboard on skew has a total of 15 datasets. These include charts for ETH futures, swaps and options open interest and volumes, ETH swap vs. spot price, ETH futures annualized rolling basis, ETH options open interest by strike, top ETH options volumes, and more.
We have selected a few of the available datasets for this overview. If you are interested in learning more about futures and options, please refer to our guide on crypto derivatives.
Useful for a quick reference, this chart shows trading volumes for ETH futures and swaps (coin-margined and USDT-settled) on OKEx over the last 24 hours. From the chart above, we can note that the ETH-USDT swap is the most popular contract, accounting for 28% of the volume, followed by the ETH-USD futures contracts, due to expire on Dec. 25, 2020.
Another important chart for assessing market activity, the open interest here denotes the value of open, or unsettled, contracts — whereas the volume shows the value of contracts traded. A rising open interest suggests new positions being opened, whereas a dropping open interest can be due to positions closing — whether due to profit-taking, liquidation or expiry.
Like the futures volumes and open interest chart earlier, this chart denotes the same metrics for ETH options markets. Looking at both, it is quickly evident that Ether futures are more popular, but that the options market also has decent volumes and open interest figures.
A useful chart for market analysts, the futures basis represents the difference between the underlying asset's spot and futures prices. If the market is bullish, the basis tends to be positive, since futures trade at higher prices compared to the spot market. In bearish phases, futures can trade lower than spot, sending the basis into negative territory.
Given their correlation, the futures basis, at any given time, is an indicator of market expectations surrounding the underlying asset's future performance. The chart above shows how the ETH futures basis has mostly remained positive in the last 30 days, with intermittent drops, especially during the first half of September.
Interestingly, these drops correspond closely with those seen in the chart below showing Bitcoin futures data from OKEx, which is also available on skew.
While clearly correlated, the two charts show how Ether's basis is much less resilient compared to Bitcoin's and is quick to follow price drops. This indicates that the market's confidence in Ether's future performance is comparatively weaker, and easily shaken.
Finally, we're going to take a look at the ETH options open interest by strike chart, which reflects the build-up of positions (open interest on the y-axis) at various price points (on the x-axis). Apart from open interest build-up around the current market price (~$350), the chart above shows large concentrations of open interest on both extremes. We can see positions built-up around $600 and higher, as well as around $200 and lower.
This pattern, to some extent, does indicate that market participants are unsure and indecisive about the underlying's future performance — sentiments also reflected in the basis charts above.
From a fundamental perspective, this lack of confidence and uncertainty could be a result of the upcoming Ethereum 2.0 update. Unlike minor protocol improvements, this upgrade is a major one and will move the Ethereum network from proof-of-work to proof-of-stake. Given how entire ecosystems run on the network, it is needless to say that a lot is riding on this upgrade and its successful launch.
With these ETH derivatives charts now publicly available, we hope market participants are able to use the data for a better understanding of ETH markets.
Not an OKEx trader? Learn how to start trading!
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
OKEx Insights presents market analyses, in-depth features, original research & curated news from crypto professionals.