Značka: Ether futures

A key Ethereum price metric hits a 6 month low as ETH falls below $3K

Ether (ETH) price lost the $3,600 support on Jan. 5 as minutes from the Federal Reserve’s December FOMC meeting showed that the regulator was committed to decreasing its balance sheet and increasing interest rates in 2022.Even with that looming overhead, Ether has problems of its own, more specifically, the ongoing $40 and higher average transaction fees. On Jan. 3 Vitalik Buterin said that Ethereum needs to be more lightweight in terms of blockchain data so that more people can manage and use it.The concerning part of Vitalik’s interview was the status of the Ethereum 2.0 upgrade, which is merely halfway implemented after six years. The subsequent roadmap phases include the “merge” and “surge” phases, followed by “full sharding implementation.” When implemented, they will lead to an 80% estimated completion of the network upgrade, according to Buterin.Ether price at Coinbase, USD. Source: TradingViewFor those analyzing Ether’s performance over the past 3 months, the current pricing seems appealing because the cryptocurrency is currently down 34% from its $4,870 all-time high. However, this short-sighted view disregards the 560% gain Ether had accrued up till Nov. 10, 2021.Furthermore, the network’s adjusted total value locked (TVL) has dropped by 17% since Ether’s price peak.Ethereum network total value locked, USD. Source: DefiLlamaAs shown above, the network’s TVL dropped from $166 billion to the current $138 billion. Meanwhile, competing smart contract networks like Terra saw their TVL increase from $11 billion to $18.7 billion. Fantom also increased the value locked on its smart contracts from $5 billion to $9 billion.Due to network upgrade delays, worsening macroeconomic conditions and a 3-month long price correction, professional traders are clearly becoming frustrated and anxious.Ether futures are at the edge of turning bearishQuarterly futures are usually the preferred instruments of whales and arbitrage desks due to their settlement date and the price difference from spot markets. However, the contract’s biggest advantage is the lack of a fluctuating funding rate.These fixed-month contracts usually trade at a slight premium to spot markets, indicating that sellers request more money to withhold settlement longer. Therefore, futures should trade at a 5% to 15% annualized premium in healthy markets. This situation is technically defined as “contango” and is not exclusive to crypto markets.Ether futures 3-month annualized premium. Source: LaevitasAs displayed above, Ether’s futures contracts premium has come down from 20% on Oct. 21 to a meager 5.5%, just slightly above the neutral market threshold. Although the basis indicator remains positive, it reached the lowest level in 6 months.The crash below $3,000 on Jan. 10 was enough to drain any bullish sentiment and more importantly, the Ethereum network’s high fees and delayed upgrades might have scared away some investors. Currently, data shows little sign that bears are ready to take the helm. If this was the case, the Ether futures premium would have turned negative.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Ethereum futures and options data reflects traders’ mixed emotions on $3.2K ETH price

Ether (ETH) has been an emotional rollercoaster over the past three months primarily because its price rallied twice. First, it peaked at $4,870 on Nov. 10 and at $4,780 on Dec. 1. However, the double top was quickly followed by a harsh rejection, which led to $490 million in long futures contract liquidations in 48 hours.Once again, hope was instilled on Dec. 8 after Ether commenced to rally 28.5% in four days to retest the $4,400 support. Soon after, the downtrend continued, leading to the $2,900 bottom on Jan. 10, which was the lowest ETH price seen in 102 days. This low marked a 40% low from the $4,870 all-time high and caused traders to question whether a bear market had been set.Ether/USD price at FTX. Source: TradingViewOne might argue that Ether is simply following Bitcoin’s 42% correction from the Nov. 10 all-time high at $69,000 and the most recent pullback has partially been attributed to the United States Federal Reserve’s potential tighter monetary policies and Kazakhstan’s political turmoil impact on mining.This simplistic analysis leaves behind some crucial developments, such as China’s official digital yuan wallet becoming the most downloaded app in local mobile app stores on Jan. 10. Furthermore, a pilot version of the nation’s central bank digital currency (CBDC) is being used in select cities and it also became available for download on app stores on Jan. 4.Even with the fiscal policy pressure and negatively skewed price action, traders should still monitor the futures contracts premium (basis rate) to analyze how bullish or bearish professional traders are.Futures traders are becoming more anxiousThe basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.However, a red alert emerges whenever this indicator fades or turns negative, a scenario known as “backwardation.”Ether 3-month futures basis rate. Source: Laevitas.chNotice how the indicator peaked at 20% on Nov. 8 as Ether surpassed $4,800, but then gradually faded away to an 8% low on Dec. 5 after ETH flash crashed to $3,480. More recently as Ether touched a $2,900 low on Jan. 10, the basis rate moved to 7%, which is its lowest level in 132 days.Consequently, professional Ether traders are not comfortable despite the 10% recovery to $3,200 on Jan. 11.Options traders recently flipped neutralTo exclude externalities specific to the futures instrument, one should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.The opposite holds when greed is the prevalent mood causing the 25% delta skew indicator to shift to the negative area.Ether 30-day options 25% delta skew. Source: TradingViewWhen market makers and whales are bearish, the 25% delta skew indicator shifts to the positive area, and readings between negative 8% and positive 8% are usually deemed neutral.Related: World’s biggest podcaster, Joe Rogan, has a ‘lot of hope’ for cryptoEther option traders entered “fear” mode on Jan. 8 as the 25% delta skew surpassed the 8% threshold, peaking at 11% two days later. However, the quick bounce from the $2,900 low instilled confidence in Ether options traders and also moved the options “fear and greed” metric to a meager 3%.At the moment, there is not a consensus sentiment-wise from Ether traders because futures markets indicate slight discontent and options arbitrage desks and whales have recently abandoned their bearish stance. This makes sense because the current $3,200 price is still reflecting the recent 15% weekly drop and is far from exciting.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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