For this reason, Ethereum traders are not affected by the current weakness of ETH

Since hitting an all-time high of $ 4,870 on November 10, the price of Ether (ETH) has seen lower lows in the past 50 days. If this downtrend continues, support from the lower trendline suggests that the altcoin will bottom out at $ 3,600. Still, the derivative data shows that professional traders are not worried about the seemingly declining structure of the market.

Price of the Ether / USD pair in FTX. Source: TradingView

Watch the price spikes subside over the 12 hour period as heightened regulatory concerns drag investors away from the sector. At a press conference on December 17, Russia’s central bank governor Elvira Nabiullina stated that a ban on cryptocurrencies in the country was “entirely feasible”.

Nabiullina cited the frequent use of cryptocurrencies for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrencies and said they were not covered by anything. Interestingly, the country plans to launch its own central bank digital currency, despite the fact that the Russian ruble has lost 44% against gold over the past four years.

For this reason, Ethereum traders are not affected by the current weakness of ETH
For this reason, Ethereum traders are not affected by the current weakness of ETH

In the United States, a bipartisan group of U.S. Senators has asked Treasury Secretary Janet Yellen to clarify the language in the infrastructure law regarding crypto tax reporting requirements. Under the current broader definition of “middleman,” miners, software developers, transaction validators, and node operators are likely to report $ 10,000 worth of digital asset transactions to the Internal Revenue Service.

Even with regulatory uncertainty and negatively distorted price movements, traders should monitor the premium on futures contracts, also known as the “base rate”, to analyze how bullish or bearish professional traders are.

Professional traders are neutral despite price weakness

The basic indicator measures the difference between longer-term futures contracts and the current spot market level. An annualized premium of 5% to 15% is expected in healthy markets. This price difference is due to sellers charging more money in order to keep the billing longer.

However, a red alert will appear every time this indicator fades or turns negative, also known as “moving backwards”.

Ether 3-month futures base rate. Source: Laevitas.ch

Notice how the sharp drop following the 24% intraday crash on December 3rd caused the annualized futures premium to hit its lowest level in two months. After the initial panic the ether futures market rebounded to current levels of 9%, which is near the middle of the “neutral” range.

To confirm whether this move was specific to this instrument, traders should also analyze the options markets. The 25% delta bias compares similar call and put options. The indicator becomes positive if “fear” prevails, since the protection premium for put options is higher than for call options with a similar risk.

When market makers are bullish, the 25% delta bias indicator shifts into negative territory, and values ​​between negative 8% and positive 8% are generally considered neutral.

Ether 30-day options with 25% delta deviation. Source: Laevitas.ch

In the last three weeks, the delta deviation of 25% ranged from a positive 3 to a positive 8, which is in the neutral range. As a result, the options market data confirms sentiment in the futures markets and suggests that whales and market makers are not worried about the recent price weakness.

If investors “pull back” a little, they will find Ether’s earnings so far to be 300%, and this explains why professional traders are not concerned about a 20% drop from the all-time high of $ 4,870.

Additionally, the total value of the smart contract-tied Ethereum network has doubled to $ 148 billion in the past six months. This data gives derivatives traders the confidence to remain calm amid the current short-term price weakness.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and every commercial move involves risk. You need to do your own research when making a decision.

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