Think Ethereum’s ETH is Dead? Surging Metrics Show Otherwise

What to know:

The overwhelming chatter on social media, especially Crypto Twitter is that Ethereum’s ether (ETH) is dead, a narrowly moving token.

Still, the market is betting on higher ETH prices as traders pile into derivatives tied to the cryptocurrency alongside a boom in Ethereum’s blob usage.

Cumulative open interest in perpetual and standard futures contracts has surged to a record 6.32 million ETH, worth over $27 billion, registering a 17% month-to-date gain, according to data source CoinGlass. An uptick in open interest alongside a price is said to validate an uptrend, and ether’s price has surged 35% to $3,400 this month, matching the industry leader’s bitcoin’s price gain.

According to data source Velo, the gap between three-month ETH futures and spot prices, the so-called premium, has expanded to an annualized 16% on offshore exchanges Binance, OKX and Deribit. Meanwhile, the front-month premium on the Chicago Mercantile Exchange has risen to 14%.

That’s noteworthy because an elevated premium could generate greater interest in cash and carry trades used to capture the price differential between the two markets, leading to increased inflows into the U.S.-listed spot ETH ETFs. The strategy comprises a long position in the spot ETF with a simultaneous short in the CME futures.

Activity in the ether options market listed on Deribit is also picking up, with over 2 million contracts active or open at press time, the highest since late June. In notional terms, the open interest stands at $7.33 billion, according to Deribit Metrics.

The price uptick has further driven up the value of assets locked on Ethereum-based applications to $65 billion as of Wednesday, a figure last seen in May 2022.

A major chunk of those, however, are held on three applications. Liquid staking protocol Lido holds over $32 billion in locked ether, Aave, a lending protocol, holds $26 billion in various assets, and restaking platform EigenLayer holds $14 billion.

Data shows a bump in revenue, fees, new wallets and on-chain volumes on Ethereum, with the past month showing elevated levels of activity compared to the period from May to September. (The metrics are no where close to an year-to-date peak seen in March, when interest around ETH ETFs was at a high.)

The Solana network and its applications continue to dominate DeFi activity, however, due to its broader retail appeal and cheap fees.

Stablecoin data further shows that Ethereum has more USDT hosted than Tron, with $60.3 billion on Ethereum compared to $57.94 billion on Tron, for the first time since June 2022.

Among sentiment factors, president-elect Donald Trump’s victory has brought back hopes of a decentralized finance (DeFi) bull market, at least among some investors, and with it demand for ETH.

The campaign indicated a move toward reducing the regulatory burden on crypto, potentially making it easier for DeFi platforms to operate within the U.S — a promise that has spurred growth in ETH and major DeFi tokens since early November.

Shaurya MalwaShaurya is the Co-Leader of the CoinDesk tokens and data team in Asia with a focus on crypto derivatives, DeFi, market microstructure, and protocol analysis. Shaurya holds over $1,000 in BTC, ETH, SOL, AVAX, SUSHI, CRV, NEAR, YFI, YFII, SHIB, DOGE, USDT, USDC, BNB, MANA, MLN, LINK, XMR, ALGO, VET, CAKE, AAVE, COMP, ROOK, TRX, SNX, RUNE, FTM, ZIL, KSM, ENJ, CKB, JOE, GHST, PERP, BTRFLY, OHM, BANANA, ROME, BURGER, SPIRIT, and ORCA. He provides over $1,000 to liquidity pools on Compound, Curve, SushiSwap, PancakeSwap, BurgerSwap, Orca, AnySwap, SpiritSwap, Rook Protocol, Yearn Finance, Synthetix, Harvest, Redacted Cartel, OlympusDAO, Rome, Trader Joe, and SUN.

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Omkar GodboleOmkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.

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