Ether soared to new record highs Thursday, but an overheated derivatives market may suggest higher volatility is on the way for the short term.
The second-largest cryptocurrency by market value set the new lifetime high of $1,928 soon before press time, having first breached the previous peak of $1,821.49 reached on Feb. 13 early today, according to CoinDesk 20 data.
In the derivatives market, the average level of the “funding rate” across major exchanges offering ether perpetuals (futures with no expiry) has risen sharply from 0.069% – just short of the early January record high of 0.21%, according to data source Glassnode.
“It shows the derivatives market is overleveraged,” Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, told CoinDesk. “With this current structure, I do not feel comfortable in running a lot of long exposure.”
The funding rate is calculated every eight hours and represents the