Is Ethereum in a Bull Market? Why is Spot Trading Dead While Derivatives Soar?

▲ Ethereum (ETH) ©Dasol Ko

Despite bullish signals, the Ethereum market is being restructured into a dangerous setup characterized by 'weak spot trading and overheated derivatives.'

According to the cryptocurrency media outlet Bitcoinist on April 29 (local time), despite Ethereum (ETH)'s price rebound, there is a clear shift where traders are focusing on derivatives trading rather than spot trading.

Recently, derivatives trading has rapidly expanded in the market, while spot trading volume has decreased. This indicates that short-term speculative trading using leverage, rather than simple buy-and-hold strategies, is dominating the market. Experts analyze that this structure makes the market more vulnerable and that volatility could rapidly expand due to liquidations or changes in sentiment.

Arab Chain, a contributor to CryptoQuant, explained this trend using the 'Ethereum Perp-Spot Volume Imbalance Z-score' based on Binance. At that time, the ETH price was moving around $2,322, and the perpetual futures trading volume reached approximately 4.47 million ETH, while the spot trading volume was only about 300 ETH. As a result, the volume imbalance score rose to 0.87, clearly showing the dominance of the derivatives market.

Historically, such imbalances have stimulated investors' risk appetite, leading to greater volatility. In particular, as leveraged positions accumulate, the likelihood of large-scale liquidations increases, which can create an environment where rapid price fluctuations are repeated in the short term. Conversely, weak spot trading signifies a slowdown in long-term investment demand, which acts as a negative factor in maintaining a stable upward trend.

However, Ethereum's fundamentals are still considered strong. According to Santiment data, the number of non-empty wallet addresses on the Ethereum network reached 189.49 million, securing a holder base 3.2 times larger than Bitcoin. This shows that Ethereum is establishing itself as a core foundational asset for the Web3 ecosystem, beyond being a simple store of value.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*