Key Points

• Bitcoin (BTC) and ether (ETH) demonstrated substantial price increases on Tuesday as U.S. officials showcased renewed optimism for a U.S.-China trade agreement.
• The rally was bolstered by a notable rise in open interest in perpetual futures, suggesting a growing confidence among investors.
• Positive funding rates were a sign of bullish sentiment, indicating a willingness among traders to incur fees to hold onto long positions.

As bitcoin (BTC) and ether’s (ETH) recovery gathered steam on Tuesday, a pronounced escalation in open interest in the perpetual futures market reflected an increasing investor optimism, coinciding with the Trump administration’s softened approach regarding trade tariffs and its anti-Federal Reserve rhetoric.

BTC surged by 6.79%, nearing the $94,000 mark—a feat not achieved since March—while ETH saw an 11% bounce to $1,175, representing its best performance since the beginning of April.

“Bitcoin’s Open Interest surged faster than its Price, with most positions originating from Binance,” remarked Joao Wedson, CEO of Alphractal Research, on X. “The issue is that a large portion consists of Longs, so increased volatility is expected in the coming hours.”

The price increase is believed to be supported partly by a short squeeze, with funding rates being negative roughly 24 hours earlier, showcasing a preference among traders for short bets.

Funding Rates Indicate Bullish Outlook

The trend for bullish long positions is further validated by the moderately positive annualized perpetual funding rates, which range from 5% to 10% for both BTC and ETH. A positive funding rate indicates a bullish sentiment, reflecting a greater willingness among traders to pay for long positions. However, extremely high rates could signal excessive optimism, but current metrics do not suggest such a scenario.