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BTC, ETH derivatives seeing fresh money amid sentiment shift — OKX Market Report

2022.07.22 Adam James

There has been a noticeable shift in crypto-market sentiment in July, coinciding with upward price action for cryptocurrency-market leaders BTC and ETH.

Let’s take a look at the data on OKX.

Key takeaways

  • Open interest for both BTC and ETH futures suggests money is entering the market, as opposed to leaving.
  • BTC options open interest is similarly bullish, indicating more money is changing hands.
  • Sentiment among top traders has temporarily bottomed and is turning toward optimism.
  • Top-trader sentiment for ETH has increased more sharply than BTC — a likely result of Ethereum’s impending switch to proof-of-stake.

Open interest indicates new money is entering the BTC and ETH markets

Open interest for BTC futures on OKX has been increasing steadily.

Because open interest represents the total number of outstanding derivative contracts that have not been settled, the clear conclusion is that new money has been flowing into the BTC futures market — given the defined upward trajectory. This is generally considered to be bullish.

BTC futures open interest on OKX has been increasing steadily throughout late June and early July. Source: OKX

ETH futures open interest is also on an upward trajectory — though has been somewhat more volatile than BTC.

It stands to reason that money is also entering the ETH side of the futures market ahead of Ethereum’s highly anticipated switch to proof-of-stake — called “The Merge.”

ETH futures open interest on OKX has been increasing — though not as smoothly as BTC futures open interest. Source: OKX

BTC options open interest is similarly bullish

Open interest for BTC options is also in a general uptrend following a series of higher lows.

As is the case with the BTC futures market, the increase in BTC options open interest indicates that money is entering the market — as opposed to leaving it. This is generally interpreted as a bullish sign.

BTC options open interest has seen a general increase in July. Source: OKX

Top-trader sentiment is becoming optimistic

Though the BTC top trader sentiment index on OKX has been in a general decline throughout June, it appears to have bottomed out near the start of July — since which point it has been trending upward.

The bullish sentiment has increased alongside the price of BTC and illustrates that the extreme fear experienced in recent months is giving way to optimism. However, patience may be necessary — as being overly optimistic could lead to a vicious bull trap in an objectively pessimistic macro environment.

The OKX BTC Top Trader Sentiment Index seemingly bottomed out near the start of July. Source: OKX

The sentiment among top ETH traders on OKX has increased more sharply than with BTC — likely a result of increased optimism surrounding Ethereum’s impending switch to proof-of-stake. With the upgrade currently on track for August or September, it is clear that many traders are finding The Merge to be an obvious catalyst for potential ETH price appreciation.

The OKX ETH Top Trader Sentiment Index is experiencing a sharper uptrend than the OKX BTC Top Trader Sentiment Index. Source: OKX

It is worth noting that the sentiment shift is not necessarily market-wide. For example, ADA and LTC have seen decreases in top-trader sentiment during the same time period — indicating that top traders may be more focused on BTC, ETH and newer altcoins.

The OKX ADA Top Trader Sentiment Index shows a decline in optimism surrounding ADA. Source: OKX

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.