Through August 2025, the Ethereum (ETH) market was very unstable, with open interest (OI) changing very quickly. With spot prices above $4,500, OI for Ethereum futures hit all-time highs. Many people saw this as a sign that big banks were putting more faith in crypto again, but others warned of too much leverage and an impending shakeout because funding rates and speculation went up every time the price changed. Here is a detailed look at the things that are making Ethereum’s futures markets so unstable right now.
Record High OI Signals Institutional Entry
A record $60.8 billion worth of Ethereum futures were bought and sold in the first two weeks of August. This huge rise was caused by both traders taking on more risk and the spot price of ETH going up 51%. The rise in OI was led by CME, Binance, and Bybit, which shows that institutional investors and large market makers are doing a lot of business.
Not only spot volumes, but also futures volumes hit all-time highs. As expiration day got closer on August 8, ETH’s price rose from below $4,000. This caused a chain reaction of short liquidations that lost over $103 million in bearish bets in a single session—nearly 53% of all crypto liquidations that day came from ETH alone. ETH had a market value of $470.8 billion at this point.
Short Squeeze Frenzy
The huge $105 million short squeeze on August 9 was the most important event of the month. This was more than half of all crypto futures liquidations in one day. It shook the trading community and caused people who bet against Ethereum’s rally to lose a lot of money.
Because of the excitement, open interest jumped by $1.9 billion that day, and the number of options traded also went up by 130%. Many traders sold “out-of-the-money” puts to bet against more volatility. This showed that people were still optimistic even though there were big swings.
Premiums Spike, Strategic Positioning Intensifies
The annualized premiums for Ethereum perpetual futures were about 11%, which is a neutral level. However, the 30-day basis dropped to 8%, which means that short-term corrections are likely. By the middle of August, on-chain analytics from platforms like Glassnode showed that OI had reached levels that have never been seen before in ETH’s history.
Also, the amount of open interest in options hit an all-time high of over $16.1 billion. There were a lot of options trades because people wanted to hedge their risks and make speculations. Calls consistently outperformed puts. On August 8, call premiums hit $82 million, showing that traders were willing to pay more for upside exposure in this volatile market.
Opportunities and Risks Ahead
Binance’s open interest in ETH futures jumped from $2.8 billion in April to almost $10 billion in August. This helped price increases but also made a pool of positions with a lot of debt that could become unstable. This huge amount of cash pushed prices up, but many analysts warned of sharp drops that were coming.
If ETH stays stable above $4,100, the momentum might last, but setups with too much debt make it more likely that prices will drop quickly if sentiment changes or big players start selling.
The way Ethereum futures work now is like a “double-edged sword.” On the one hand, there is a lot of hope, more institutions are getting involved, and prices have gone up a lot. However, the market’s extreme volatility, sharp changes in open interest, and sudden sales are all signs that the market is still not stable. Investors and traders need to be extra careful—good risk management is more important than ever—so that the next big correction doesn’t cause them to lose a lot of money.