Rise in Bitcoin Futures Open Interest Signals Investor Faith in Trade Negotiations and Powell’s Policy Moves.

Bitcoin and Ether Rise Amid U.S.-China Trade Deal Optimism, Futures Market Sees Surge in Activity

Bitcoin (BTC) and ether (ETH) experienced substantial price gains on Tuesday, fueled by growing optimism surrounding a potential U.S.-China trade deal. The rally in the two leading cryptocurrencies was accompanied by a sharp increase in open interest within the perpetual futures markets, highlighting rising investor confidence.

Bitcoin saw a notable 6.79% increase, climbing nearly to $94,000, its highest level since March. This marked the most significant single-day percentage gain since early April. Ether followed closely behind, surging by 11% to $1,175, marking its strongest performance since early April.

The market uptick followed remarks by U.S. Treasury Secretary Scott Bessent, who spoke on the potential de-escalation of trade tensions with China. President Donald Trump later reinforced this positive sentiment, stating that tariffs on Chinese imports would be significantly reduced. Trump also clarified that he had no plans to remove Federal Reserve Chair Jerome Powell, which helped soothe investor nerves.

In response to the price surge, traders flocked to the perpetual futures markets, with substantial increases in open interest seen across major exchanges, including Binance, Bybit, OKX, and Deribit. Bitcoin’s open interest surged by 10% to $17.83 billion, marking the largest increase since early March.

“Bitcoin’s open interest has surged faster than its price, particularly driven by long positions on Binance,” said Joao Wedson, CEO of Alphractal Research. “This suggests we may experience heightened volatility in the short term as the market adjusts.”

The surge in Bitcoin and Ether prices was likely exacerbated by a short squeeze, where traders unwound their short positions. A negative funding rate just 24 hours earlier indicated a bias towards short positions, which may have contributed to the rapid price move.

Ether also saw significant growth in its open interest, rising by 16% to $6.60 billion, the largest single-day increase since November.

The rise in both prices and open interest signals continued bullish momentum for Bitcoin and Ether.

Bullish Sentiment Confirmed by Funding Rates

In addition to the surge in open interest, the positive funding rates for both Bitcoin and Ether further validate the bullish sentiment. The funding rates for both cryptocurrencies are in the range of 5% to 10%, indicating that traders are willing to pay to hold long positions.

Funding rates are the fees exchanged between traders holding long and short positions in perpetual futures contracts. A positive funding rate suggests that there is more demand for long positions, signaling that traders expect prices to continue rising. While funding rates can sometimes become excessively high, the current rates remain moderate, indicating a healthy level of optimism in the market.