Increasing Demand for Ethereum: Liquidity Flowing into ETH Derivatives

• Recent data analyzing crypto demand reveals significant growth in the derivatives segment in June.
• According to a recent report by CCData, spot and derivatives demand on centralized exchanges increased by 14.2% to reach $2.71 trillion.
• ETH emerged as one of the cryptocurrencies benefiting from the surge in derivatives demand, reflected particularly in the open interest metric, which experienced a significant increase from its lowest point in May.

Current data indicates an increased demand for Ethereum and a liquidity flow into ETH in the derivatives markets.

Increasing Demand for Ethereum

Recent data analyzing crypto demand reveals significant growth in the derivatives segment in June, and Ethereum (ETH) is among the cryptocurrencies benefiting from this demand. June was an interesting month for both ETH and the overall crypto market, as it witnessed a substantial increase in demand.

According to CCData’s recent report, spot and derivatives demand on centralized exchanges increased by 14.2% to reach $2.71 trillion. The derivatives segment accounted for the majority of this demand, totaling $2.13 trillion, which corresponds to a 13.7% increase.

ETH emerged as one of the cryptocurrencies benefiting from the surge in derivatives demand, reflected particularly in the open interest metric, which experienced a significant increase from its lowest point in May. It reached a new high at the beginning of July, confirming strong activity in the derivatives market.

Ethereum’s funding rate also increased, especially in the last week of June, further confirming the increased liquidity flow into ETH derivatives. However, why did derivatives demand exceed spot demand? Perhaps one reason is the ease of investing in the derivatives segment. Additionally, offering leverage opportunities may be another significant factor.

Is the Current Level of Leverage Sufficient to Make a Significant Impact?

Market confidence tends to influence leverage demand. Therefore, the last week of June brought an increase in leverage demand, as many investors anticipated higher prices.

Higher leverage typically confirms some directional confidence in the market. However, it also makes the underlying asset more vulnerable to potential liquidations, which can trigger a reversal.

While ETH’s recent rally was a test, it failed to break above the $2,000 price range. At the time of writing, it is trading at $1,940. Furthermore, the liquidation level has slightly increased in the past two days.

ETH long position liquidations reached $5.38 million in the past 24 hours, indicating the observed growth in crypto demand and interest in leverage can be seen as a healthy sign. This suggests that the market recovery witnessed in the first half of 2023 may continue into the second half of the year.