Surge in BTC Perpetual Futures Open Interest Reflects Investor Confidence

Bitcoin and Ether saw notable price rises on Tuesday linked to positive news about a U.S.-China trade deal. The open interest in perpetual futures increased by 10%, indicating strong investor confidence. Positive funding rates reflect bullish sentiment, with a surge in both BTC and ETH highlighting potential for continued growth.

On Tuesday, Bitcoin (BTC) and Ether (ETH) experienced significant price increases amid optimistic news regarding a potential U.S.-China trade deal. This surge in prices was bolstered by a 10% rise in the open interest of perpetual futures, which demonstrates heightened investor confidence in the cryptocurrencies. Positive funding rates reflect a bullish sentiment among traders, who are increasingly willing to incur fees to maintain long positions.

Bitcoin’s price rose by 6.79%, nearing $94,000, marking its most substantial daily increase since April 9. Meanwhile, Ether’s token enjoyed an 11% surge, reaching $1,175, its strongest performance since early April. The market reacted notably to discussions around de-escalation of trade tensions and an announcement from President Trump regarding reduced tariffs on Chinese goods.

Trading activities were particularly robust on major offshore exchanges, with substantial increases in open interest noted on platforms such as Binance, Bybit, OKX, and Deribit. The total open interest for BTC perpetual futures reached $17.83 billion, signalling the largest daily increase since March 2 when Trump suggested including cryptocurrencies in a strategic digital asset reserve.

Experts have noted that the open interest for Bitcoin soared faster than its price, primarily driven by long positions on Binance. However, this indicates potential volatility in the market. The recent price rally may have also been promoted by a short squeeze, where existing short positions were closed rapidly, benefiting the rising price trend.

Ether’s open interest also saw an impressive increase of nearly 16%, amounting to $6.60 billion, the highest daily growth since late November last year. This increase, coupled with rising prices, suggests a sustained bullish momentum for both BTC and ETH.

The positive funding rates, which range between 5% to 10% annually for BTC and ETH, indicate a preference for bullish long trades. Funding rates, exchanged between long and short positions every eight hours, serve to maintain futures contract pricing close to the actual spot price. A positive rate suggests that traders are willing to pay fees for long positions, signalling overall bullish sentiment in the market, although excessively high rates could imply speculative excess, which is not currently observed.