$580M open interest makes Cardano (ADA) the third largest futures market

Friday 26 February 2021, 6:08 AM AEST - 1 month ago

On Feb. 3, Cardano conducted a hard fork and successfully integrated the Mary upgrade to the testnet, transforming the blockchain into a multiasset network similar to Ethereum.

This event seems to be one of the reasons for the impressive 475% year-to-date rally of ADA, and the altcoin is now causing unexpected ripples in the derivatives markets.

Since the end of December 2020, ADA's $81-million aggregate futures open interest hiked to the current $580 million, becoming the third-largest derivatives market, behind Bitcoin (BTC) and Ether (ETH).

Data indicates this was not purely a technical adjustment, as Cardano's on-chain and trading metrics vastly outperform Litecoin's (LTC).

ADA futures aggregate open interest. Source: Bybt

A week ago, Litecoin led ADA's open interest by a 50% or higher margin. That all changed over the past five days, as Litecoin's aggregate futures position was cut by 40%.

Despite facing a similar price correction to Litecoin's 30% one between Feb. 20 and 22, ADA had $125-million long contracts liquidations, roughly 19% of the open interest at that time.

ADA trading volume and on-chain metrics strengthen

Volume is the first and foremost indicator of investors' interest. Regardless of the price movement, low trading activity reflects a small user base or a lack of new entrants, which is especially problematic for cryptocurrencies as an emerging asset class.

ADA and LTC 3-day average spot trading volume, USD. Source: Messari Screener

Although starting from a much lower base three months ago, ADA's trading volume soared in February, while Litecoin was unable to surpass the $2 billion daily average mark. Meanwhile, ADA's aggregate spot trading volume at exchanges currently sits at $2.8 billion.

ADA an ...

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