Ethereum futures volume and transaction numbers surpass Bitcoin before the merger

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(Kitco News) – Things are heating up for top smart contract platform Ethereum (ETH), which is less than a week away from the final step in its transition to a proof-of-stake, known as the Merger.

Traders have been preparing to capitalize on the hype surrounding the merger by scooping up Ether derivatives for a potential “buy the rumor, sell the news” type of event, with data showing that the Ether futures market has rallied significantly since early August.

According to a new report from Tom Rogers, head of research at ETC Group, last month was “the first time since records began that Ethereum futures trading volume surpassed Bitcoin, at $1.07 [trillion] throughout the month.”

Ether vs. Bitcoin futures trading volume. Source: ETC Group

That stands in stark contrast to data from the past three years, which shows that “Bitcoin futures volume has generally exceeded its nearest rival by a ratio of between 2:1 and 5:1,” the report said.

August marked only the second time in history that Ether futures volume exceeded $1 trillion, indicating that interest in Ethereum is increasing as the merger approaches.

“Higher volume means there is more liquidity in some asset, which is desirable from a trading perspective, as there are many buyers and sellers. That would suggest that Ethereum’s 16% bounce to the upside since August 29 will continue apace,” wrote Rogers.

Further evidence of growing interest can be found in transaction numbers, which show that unique Ethereum transactions jumped 40.3% between August 31 and September 4, surpassing Bitcoin (BTC) transaction numbers on several occasions.

Data provided by Bitinfocharts shows that on September 4, the total number of transactions on Ethereum was 459,451 compared to 421,019 on Bitcoin. Over the past week, Ether’s price has risen by 7% compared to a 4% increase for BTC, underscoring the fact that transaction volumes tend to correlate with price movements.

Considering, interest in Ethereum has been higher than Bitcoin since the mid-June low, with Ether’s price rising 95% compared to a 20% increase for BTC over the same period.

A similar trend was also seen in futures data, with data from Deribit showing that interest in Ether futures has increased by 70% since mid-July compared to a 12.9% increase in interest in Bitcoin futures.

Bitcoin vs. Ether – A long-term view

Insight into the future outlook for the Ether price was provided by David Lifchitz, Managing Partner and Chief Investment Officer of ExoAlpha, who highlighted that Ether “has been able to bounce around 90% off the summer low while BTC has remained stuck near the summer low.”

Lifchitz pointed to the merger as the reason for Ether’s better performance, but warned that the post-merger outlook is unknown, as the network will still have to contend with one of its biggest problems – high transaction costs.

“A lot of hype has been put into that event, but since the cost of transactions on the Ethereum blockchain with PoS is not expected to be much reduced from the current PoW model, which can become very problematic at times, it’s anyone’s guess where the ETH price will go after the merger.”

Lifchitz also highlighted the possibility that the merger might not succeed, making the Ethereum blockchain unstable for some time.

Although it currently appears based on testing that the merger will go down without issue, several cryptocurrency exchanges are not taking any chances and “have already stopped trading ETH pairs or still allow it in a reduced size until more clarity emerges after the merger.”

Overall, Lifchitz suggested that the recent gains for Ethereum are more likely due to speculation surrounding the merger and are not necessarily representative of how Bitcoin and Ethereum are viewed on a macro scale.

“Therefore, the gain of ETH over BTC since mid-summer is highly idiosyncratic and does not reflect the global perception of the crypto market, which is better represented by BTC.”