Ethereum derivatives market cools as prices extend decline

• Average daily trade volume across Ethereum’s derivatives market has fallen to new lows in 2023.
• Following the Shanghai Upgrade, liquidity has gradually exited the futures markets. 

In the current cycle, activity across Ethereum’s [ETH] derivatives markets have fallen below levels observed in 2021 and 2022, Glassnode found in a new report. 

Read Ethereum’s [ETH] Price Prediction 2023-24

According to the on-chain analytics firm, the average daily trade volume across Ethereum’s futures and options markets has fallen to just $14.3 billion, “which is around half the average volume over the last two years.”

Between 2021 and 2022, the average daily trade volume across these markets was $26.08 billion. With increased liquidity flush out, last week’s average daily trade volume was less than $10 billion, Glassnode found.

Source: Glassnode

 No more speculative events to drive the futures markets?

In anticipation of the 12 April Shanghai Upgrade, Ethereum’s futures markets saw increased activity. According to data from Glassnode, Ethereum futures open interest, tracked on a 30-day small moving average, between 1 January and 12 April had climbed by 10%. 

When Shapella went live, futures open interest totaled $ 5.18 billion. However, as many viewed the upgrade as the last major speculative event for the asset, futures market participants began to exit their positions.

This resulted in a steady decline in open interest. As of 4 September, this was $4.32 billion, dropping below its 1 January level.

Source: Glassnode

Ethereum’s options market, on the other hand, excelled, Glassnode found. According to the report, this market has seen over 256% uptick in daily trade volume since the beginning of the year. As of 4 September, this stood at $5.48 billion.

On the spot market…

At press time, ETH exchanged hands at $1,621, per data from CoinMarketCap. As accumulation slows amongst daily traders, ETH’s key momentum indicators indicate climbing sell-offs.

 Is your portfolio green? Check out the ETH Profit Calculator

On a daily chart, the coin’s Stochastic RSI (StochRSI) has trended downward since 31 August. At press time, the indicator’s %K line (blue) rested below 50 at 46.08. In a downward-facing position, ETH’s distribution continues to outpace accumulation.  

Likewise, the coin’s On-Balance-Volume (OBV) has dwindled since mid-August. It was 23.971 million at press time, having fallen by 1% in the last three weeks. When an asset’s OBV declines in this manner, it means that the volume of selling has outweighed the buying. 

Source: ETH/USDT on TradingView