Ethereum Futures Open Interest Hits All-Time High — Has the Ethereum Bull Run Begun?

Author: Marcel Pechman, CoinTelegraph; Compiled by Baishui, Jinse Finance

Between November 20 and 27, ETH surged 15%, approaching the $3,500 mark for the first time in four months. The rally coincided with a record high in Ethereum futures open interest, raising questions among traders as to whether rising leverage means excessive bullish sentiment.

Total open interest in Ethereum futures, ETH. Source: CoinGlass

Over the 30 days ending November 27, total open interest in Ethereum futures climbed 23% to $22 billion. In comparison, three months earlier on August 27, open interest in Bitcoin futures was $31.2 billion. Furthermore, when ETH was trading above $4,000 on May 13, ETH futures open interest was $14 billion.

Dominating the market are Binance, Bybit, and OKX, which together account for 60% of ETH futures demand. However, the Chicago Mercantile Exchange (CME) is steadily expanding its footprint. Notably, CME currently holds $2.5 billion in open interest in ETH futures, indicating growing institutional participation — a development often seen as a sign of market maturity.

High demand for leverage, whether from institutional or retail investors, does not necessarily indicate bullish sentiment. Derivatives markets maintain a balance between buyers and sellers, and they create opportunities for strategies that exploit a variety of scenarios, including price declines.

For example, a cash carry strategy involves buying Ethereum in the spot (or margin) market while simultaneously selling the same notional amount in Ethereum futures. Similarly, traders can take advantage of interest rate differences by selling longer-term contracts, such as those expiring in March 2025, while simultaneously buying shorter-term contracts, such as December 2024. These strategies do not reflect bullish sentiment, but can significantly increase demand for Ethereum leverage.

Ethereum 2-month futures annualized premium. Source: Laevitas.ch

On November 6, the 2-month ETH futures annualized premium (base rate) exceeded the neutral threshold of 10% and remained at a strong level of 17% over the past week.This rate enables traders to earn a fixed return while fully hedging their risk exposure through cash arbitrage strategies. However, it is worth noting that some market participants accepted a 17% cost to maintain leveraged long positions, indicating a moderately bullish sentiment in the market. ETH Liquidations May Increase Due to Retail Investors In a highly leveraged environment, the greatest risk often comes from retail traders, colloquially known as “degens,” who often use up to 20x leverage. In this case, a standard daily price drop of 5% can wipe out the entire margin deposit and trigger liquidations. Between November 23 and 26, $163 million of leveraged long ETH futures positions were forced to liquidate. To gauge the health of Ethereum retail futures positions, the perpetual contract is a key indicator. Unlike monthly contracts, perpetual contracts closely reflect the ETH spot price. They use a variable funding rate - usually between 0.5% and 2.1% per month - to balance leverage between long and short positions. ETH Perpetual Futures 8-hour funding rate. Source: Laevitas.ch Currently, the Ethereum Perpetual Futures funding rate is close to the neutral threshold, at 2.1% per month. Although it briefly surged above 4% on November 25, it did not last. This suggests that even with a 15% weekly increase in Ethereum prices, retail demand for leveraged longs remains subdued.

These dynamics reinforce that the rise in Ethereum open interest reflects institutional strategies — such as hedging or neutral positions — rather than outright bullish sentiment.