As the second largest cryptocurrency on the market, ETH continues to surprise investors. A look at the asset’s spot price action over the past month isn’t surprising, but last month’s ETH derivatives market gave us an interesting insight. If it is sustainable, ETH will attract many new participants.

Price down and volume up?

While September wasn’t the best month in terms of price movement, there was a massive spike in trading volume. In particular, the index gained 13.9% when it combined both the top and lower tier exchanges. In fact, the volume of the spot market even peaked at $ 161 billion on September 7, which will one day also be a three-month high.

Total volume in the spot market | Source: CryptoCompare

Among them, the 15 largest exchanges contributed the most to the surge, with trading volumes up 10.8% from August.

The derivatives market is also developing well. As leveraged traders invest deeper in the market, their participation rose not due to Bitcoin-related news, but led by ETH.

Volume of the top exchanges | Source: CryptoCompare

How does ETH run?

Looking at the derivatives market, the open interest (OI) of Bitcoin futures contracts has decreased by 3.7%. During the same period, ETH’s open interest increased by 4.7%. At the same time, open interest for perpetual contracts has increased 3.7% since August to $ 4 billion.

BTC and ETH futures open interest in July, August and September | Source: CryptoCompare

In fact, the world’s largest derivatives market, CME, hit ETH’s open interest last month, up 10.5% to an all-time high.

Surprisingly, the BTC OI on CME fell 3.1% over the same period and ETH’s volume rose 34.51%.

CME Futures Monthly Volume | Source: CryptoCompare

The interesting observation here is that all of these rallies happened at a time when the market was falling. In September the ETH price fell by 21.69%. However, the proliferation of derivatives suggests that investors are shifting their focus to leveraged trading.

ETH price chart | Source: Tradingview

This is very much appreciated as it allows investors with less money to increase purchasing power and increase profits, even if they are long or short.

However, there is also the potential for significant market volatility if investors liquidate the contract, resulting in massive price drops.

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