Ethereum’s price has declined by 11% over the past month, yet there remains optimism that it could rebound to $4,000. According to recent market data, open interest in Ether futures has soared to a record 9 million ETH as of January 17. This increase follows a notable 10% rise in open interest over a two-week period, suggesting a growing interest in leveraged positions despite Ethereum retesting the $3,000 support level on January 13.
Major exchanges like Binance, Bybit, and Gate.io account for 54% of the market, while the Chicago Mercantile Exchange holds 10% of the open interest. Compared to Bitcoin, which sees 28% of its market share on CME, Ethereum displays lower institutional involvement.
While a rise in open interest could imply bullish sentiment, it is not decisively so, as futures contracts involve both a buyer (long) and a seller (short). Analysts often evaluate sentiments by observing the futures premium, which indicates the cost of leveraged positions. As of January 17, the annualized premium for ETH monthly futures was 12%, reflecting market optimism following a recent underperformance compared to broader cryptocurrency trends.
The differential cost of options contracts, known as the 25% delta skew, reached -4% on the same day, indicating balanced sentiment with a slight lean towards bullishness. This metric has remained within its neutral range, implying that bearish positions are slightly cheaper than bullish ones.
Retail traders’ leverage demand is also gauged through the funding rate of Ether perpetual contracts. Currently at 0.9% per month, the rate indicates a balanced market sentiment without excessive leverage on either side, suggesting potential for upward price movement.
Broader macroeconomic trends have contributed to this confidence, with softer-than-expected inflation data boosting investor sentiment and raising hopes for multiple Federal Reserve rate cuts in 2025. A more accommodative monetary policy would typically favor cryptocurrencies.
Additionally, World Liberty Financial’s recent acquisition of cryptocurrency, particularly Ether, in December 2024, has buoyed market optimism. This initiative aligns with Donald Trump’s public endorsements of blockchain innovation and digital assets, further fueling positive sentiment around Ethereum. Despite recent setbacks, Ethereum remains poised for a potential upswing, possibly testing the $4,000 mark in the coming weeks as institutional participation and trader confidence improve.