Tuesday, September 26, 2023
HomeEthereumHere's why Ethereum traders might laugh at ETH's current weakness

Here’s why Ethereum traders might laugh at ETH’s current weakness

Ethereum (ETH) prices have hit a record low in the last 50 days since reaching a record high of $ 4,870 on November 10. If this downtrend continues, low trendline support suggests that altcoin will bottom out at $ 3,600. Still, derivative data show that professional traders are not concerned about the seemingly bearish market structure.

FTX Ethereum / USD price. Source: TradingView

Notice how price spikes diminish in 12 hours as rising regulatory concerns move investors away from the sector. At a press conference on December 17, Central Bank of Russia Governor Elvira Nabiullina said the ban on cryptocurrencies in the country was “very feasible.”

Nabiullina cited the frequent use of cryptography for illegal transactions and the significant risks to individual investors. Russian President Vladimir Putin also recently criticized that cryptocurrencies are not backed by anything. Interestingly, despite the Russian ruble losing 44% of gold in the last four years, the country plans to launch its own central bank digital currency.

In the United States, a bipartisan group of US Senators is calling on Treasury Secretary Janet Yellen to clarify the wording of the infrastructure bill on cryptocurrency reporting requirements. Under the current broader definition of “broker,” miners, software developers, transaction verifiers, and nod operators may need to report digital asset transactions worth more than $ 10,000. I have. To the Internal Revenue Service.

Despite regulatory uncertainty and negative price fluctuations, traders monitor futures premiums (also known as “basic rates”) to analyze how bullish or bearish professional traders are. is needed.

Pro traders are neutral despite the low price

Core indicators measure the difference between long-term futures contracts and current spot market levels. In a healthy market, annual premiums are expected to be 5-15%. This price difference is due to the fact that sellers are demanding more money to withhold payments for longer.

However, if this indicator fades or becomes negative, you will see a red alert, also known as a “pullback.” “”

Base rate for ether futures for 3 months. Source: Laevitas.ch

Notice that the annual premium reached its lowest level in two months due to the sharp drop after the 24% daytime crash on December 3rd. After the first panic, the Ether futures market returned to 9% of its current level. This is roughly in the middle of the “neutral” range.

Traders also need to analyze the options market to see if this move is unique to this product. A 25% delta skew compares similar call (buy) and sell (put) options. Protective put premiums are higher than similar high-risk calls, so when “fear” is widespread, the indicator will be positive.

If the market maker is bullish, the 25% delta asymmetry index goes into the negative zone and values ​​between 8% and 8% are generally considered neutral.

30-day Ether Option 25% delta asymmetry. Source: Laevitas.ch

Related: Senate Hearing on Stable Coins: Compliance Insecurity and Republican Retreat

Over the last 3 weeks, the 25% delta bias is in the positive range of 3-8 and is in the neutral zone. Therefore, options market data examines the sentiment seen in the futures market and shows that whales and market makers are not worried about recent price weaknesses.

If the investor “zooms in” a bit, we can see that Ether’s year-to-date profit is 300%. As a result, professional traders are not worried about a 20% decline since the beginning of the year. The highest ever $ 4,870.

In addition, the total value of Ethereum networks stuck in smart contracts has doubled in the last six months to reach $ 148 billion. This data gives derivative traders the confidence to stay calm despite the current weaknesses in short-term prices.

The views and opinions expressed here are: author It does not necessarily reflect TBEN’s view. All investment and trade movements carry risks. You need to do your own research before making a decision.

- Advertisment -
Google search engine

Most Popular

Recent Comments