December 17th The price of Ether (ETH) rose to $ 677, its highest since May 2018, and it appears that the altcoin price was propelled above $ 21,000 by the rapid movement of Bitcoin (BTC). It is also possible that the announcement by Introduction of ETH futures on CME also played a role.
Solid fundamentals and the flow of good news also appear to be helping Ether hold above $ 640 for the past few days. Despite today’s crash, these basics remain intact. Eth2’s stake exceeded its total value of $ 1 billion and this shows that the big players are committed to the long term as it is not currently possible to redeem these tokens.
To understand if the recent spike is reflecting temporary emotions or possibly a new price level, The usage metrics of the Ethereum network should be considered.
A good start is Analyze transactions and value transfers.
The graph above shows how much the indicator recovered after a brief slump on December 15th. The continued level of over $ 2 billion in daily transactions and transfers shows a significant improvement over the past two months.
So, The change to USD 640 corresponded to the activity of the Ethereum blockchain.
Withdrawals on exchanges resumed
The surge in withdrawals from exchanges may be due to several reasons, including staking, crop farming, and buyers sending coins to a cold store. Typically, a steady stream of net deposits indicates a willingness to sell in the near future.
Between December 16th and 18th There were 232,000 ether deposits on the exchanges, reversing a 14-day trend. During those two weeks, withdrawals exceeded deposits by 470,000. This shows that there was selling pressure when the price of ether broke above $ 600.
It is worth noting that December 19 marked a net withdrawal of 293,000 ethers, the largest outflow since October 14. Hence, the initial move of investors rushing to get their profits above $ 600 could have dissolved.
Although it is too early to determine if a second wave of deposits will affect the exchange, The indicator shows that traders are ready to accumulate at the current price level.
The futures premium peaked but has since returned to normal
Professional traders tend to dominate longer-term futures contracts with fixed expiration dates. By measuring the spending gap between futures and the regular spot market, a trader can measure optimism in the market.
3-month futures generally have to trade at a premium of 1.5% or more compared to regular cash exchanges. Every time this ad disappears or goes negative, it’s a red flag. This situation is known as “Backwardation” and indicates that the market is turning bearish.
The graphic above shows that The indicator hit a high of 5.8% on December 19, but was then adjusted to 5% when ether stabilized near $ 650. Persistent values above 3.5% indicate optimism, although by no means exaggerated.
The current rate of over 4%, however, corresponds to an annualized premium of 17% and is well above the level of the previous months. This shows that despite the weakness observed on December 19th, professional traders continue to have confidence in the upside potential of Ether.
The spot volume is recovering
As well as monitoring futures contracts Traders who make the most profit also keep track of the volume on the spot market. Overcoming resistance levels at low volumes is fascinating as low volumes generally indicate a lack of confidence. Therefore, the major price changes must be accompanied by a large volume of trading.
Even if December 17th is excluded, the impressive $ 3.2 billion volume last week is still significantly higher than average. Volume peaks are often accompanied by new price highs, although a certain increase in volume is expected afterwards.
The current average daily signal strength per week is $ 1.5 billion There is no doubt that decent flow will help break resistance at $ 600.
Buy / sell ratio (put-to-call) of options
By measuring whether there is more activity through call options or put options, the general market sentiment can be determined. In general, call options are used for bullish strategies while put options are used for bearish strategies.
A put-to-call ratio of 0.70 indicates that the open interest in put options is 30% behind the most bullish call options, and therefore sentiment is bullish.
Since December 11th, investors have been trading a higher volume of call options. This indicates a reversal of a bearish move that lasted two weeks.
These data are very encouraging, considering that ether is up 20% since December 11th, However, there is no evidence that investors have bought any more bearish neutral option strategies.
Despite some signs of weakness after Ether tested its annual high of $ 677 on December 17th, Each of the five indicators discussed above have maintained bullish levels.
While Ether managed to quickly rebound from its dip below $ 600 on December 21, investors gained more confidence that the bull is not over yet.
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