Bitcoin and Ether Surge as U.S.-China Trade Hopes Boost Investor Sentiment
Bitcoin (BTC) and ether (ETH) saw substantial price gains on Tuesday, fueled by rising optimism over a potential U.S.-China trade deal and a more dovish stance from U.S. officials. As the recovery rally for both cryptocurrencies gained steam, the perpetual futures market also showed a sharp increase in open interest, signaling growing investor confidence.
Bitcoin, the world’s largest cryptocurrency by market capitalization, climbed 6.79%, approaching $94,000 for the first time since March, according to CoinDesk data. This marked the most significant single-day percentage gain since April 9. Ether, the native token of the Ethereum blockchain, surged 11%, reaching $1,175, its best performance since April 2.
The rally was sparked by U.S. Treasury Secretary Scott Bessent’s comments about de-escalating U.S.-China trade tensions, followed by President Donald Trump’s announcement that tariffs on Chinese goods would be significantly reduced from the current 245% rate. Trump also stated that he had no plans to remove Federal Reserve Chair Jerome Powell from his position.
As the price of BTC and ETH climbed, traders increased their activity in the perpetual futures market, particularly on major offshore exchanges such as Binance, Bybit, OKX, and Deribit, as well as decentralized exchange Hyperliquid. The notional open interest for BTC perpetual futures rose by 10%, reaching $17.83 billion, marking the largest single-day increase since March 2.
“Bitcoin’s Open Interest surged faster than its price, with most positions originating from Binance,” said Joao Wedson, CEO of Alphractal Research, in a post on X. “The issue is that a large portion consists of Longs, so increased volatility is expected in the coming hours.”
The rally was likely fueled in part by a short squeeze, with short positions in perpetual futures being unwound. Funding rates were negative about 24 hours ago, indicating a bias toward short positions, which may have contributed to the price jump.
Ether’s notional open interest also saw a significant increase, rising by nearly 16% to $6.60 billion, the largest single-day jump since November 27.
Open interest rising alongside price increases is often seen as confirmation of bullish momentum, suggesting that both BTC and ETH could continue to rise in the short term.
Funding Rates Signal Bullish Sentiment
In addition to the surge in open interest, the funding rates for BTC and ETH also point to bullish sentiment. The annualized perpetual funding rates for both cryptocurrencies are currently in the range of 5% to 10%, signaling that traders are more inclined to hold long positions. This suggests that the overall market sentiment remains positive.
Funding rates are payments exchanged between traders holding long and short positions in perpetual futures contracts and are designed to keep the contract price in line with the underlying asset’s spot price. Positive funding rates indicate a willingness among traders to pay fees for long positions, further confirming the current bullish outlook.
While excessively high funding rates can sometimes signal speculative excess, the current rates are not at extremes, suggesting that the market’s optimism is sustainable for now.
