Bitcoin and Ether Surge on U.S.-China Trade Optimism, Futures Market Activity Soars
Bitcoin (BTC) and ether (ETH) saw significant price increases on Tuesday, spurred by renewed optimism over the potential for a U.S.-China trade deal. As both cryptocurrencies rallied, the perpetual futures market experienced a surge in open interest, signaling growing confidence from investors.
Bitcoin gained 6.79%, briefly topping $94,000 for the first time since March, marking the largest single-day percentage increase since April 9. Ether followed suit, rising 11% to $1,175, its best performance since early April.
The gains came after U.S. Treasury Secretary Scott Bessent remarked that U.S.-China trade tensions were likely to de-escalate. President Donald Trump also announced that tariffs on Chinese goods would be significantly reduced, calming investor fears. Additionally, Trump confirmed that he had no plans to dismiss Federal Reserve Chair Jerome Powell, further boosting market sentiment.
This rally was accompanied by a sharp rise in open interest within the perpetual futures markets, indicating that traders were actively betting on higher prices. Major exchanges such as Binance, Bybit, OKX, and Deribit saw substantial increases in open interest. Bitcoin’s perpetual futures open interest rose 10% to $17.83 billion, the largest single-day increase since March 2.
“Bitcoin’s open interest has increased more rapidly than its price, largely driven by long positions on Binance,” said Joao Wedson, CEO of Alphractal Research. “This suggests the possibility of higher volatility as the market adjusts in the coming hours.”
The price surge was likely exacerbated by a short squeeze, with traders unwinding their short positions. Funding rates, which had been negative 24 hours earlier, indicated a bias toward short positions, which may have amplified the price movement.
Ether also saw strong growth in open interest, with a 16% increase, reaching $6.60 billion, the largest one-day rise since November 27.
Bullish Sentiment Underpinned by Positive Funding Rates
The positive funding rates for both Bitcoin and Ether further support the bullish outlook. Funding rates, which reflect the cost of holding long and short positions in perpetual futures contracts, are currently in the range of 5% to 10% for both cryptocurrencies, indicating that traders are willing to pay to maintain long positions.
A positive funding rate suggests strong bullish sentiment in the market, as traders expect prices to rise. While excessive funding rates can indicate speculative excess, the current levels remain moderate, suggesting a healthy and sustainable market environment for both Bitcoin and Ether.
