Although Ether (ETH) hit an all-time high of $ 4,870 on November 10, the bulls have little reason to celebrate. The annual gains of 290% were overshadowed by the price decline of 18% in December. But still, the locked value in smart contracts (TVL, for its abbreviation in English) of the Ethereum network multiplied by nine to get to $ 155,000 million.
A look at the price history chart for the past two months doesn’t really tell the whole story, and Ether’s current market cap of $ 450 billion makes it one of the top 20 tradable assets in the world, just behind the two-century-old Johnson Johnson conglomerate.
The year 2021 should be remembered for the great growth of the decentralized stock exchanges, whose daily volume hit $ 3 billion, up 340% from the last quarter of 2020. Even so, cryptocurrency traders are notoriously short-sighted, adding to the impact of the downtrend channel that is emerging.
Derivatives markets do not reflect panic selling
To understand if the downtrend has been infused, you need to look at the funding rate for the futures. Perpetual contracts, also known as reverse swaps, have an implied interest rate that is usually calculated every eight hours. These measures serve to avoid currency risk imbalances. A positive funding rate indicates that long positions (buyers) require more leverage.
However, the opposite situation occurs when short sales (sellers) demand more leverage and this causes the funding rate to become negative.
As shown in the graphic above, the eight-hour rate stayed near zero in December, suggesting a demand for balanced leverage from buyers and sellers. Had there been a few moments of panic, this would have been reflected in these derivatives.
Big traders are increasing their bullish bets
The data provided by the exchanges shows traders’ net positioning between long and short. By analyzing each client’s position in spot, perpetual and futures contracts, you can better understand whether professional traders are going bullish or bearish..
From time to time there are discrepancies in the methods used between the various exchanges, that is Viewers should keep an eye on changes, not absolute numbers.
Despite the 9% correction in Ether since December 24th, major traders on Binance, Huobi and OKEx have increased their leverage length. More specifically, Binance was the only exchange faced with a slight decline in the long-short ratio from large traders. The value rose from 0.98 to 0.92. That shock was more than made up for by OKEx traders who increased their bullish bets from 1.67 to 3.20 within a week.
At the moment there is hardly any negative mood in the market. According to the data, Professional traders are buying less, while net short selling demand from retail investors has changed little over the past month.or. Of course, none of this can predict when Ether will reverse the current descending channel, but it could be inferred that from here there is little interest in betting lower.
The points of view and opinions expressed here are exclusively those of authorTO and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risks. You need to do your own research when making a decision.