Značka: longs

2 key Ethereum price indicators point to traders opening long positions

Ether (ETH) price has been unable to close above $1,400 for the past 29 days and it has been trading in a relatively tight $150 range. At the moment, the $1,250 support and the $1,400 resistance seem difficult to break, but two months ago, Ether was trading at $2,000. The current price range for Ether simply reflects how volatile cryptocurrencies can be.From one side, investors are calm as Ether trades 50% above the $880 intraday low on June 18. However, the price is still down 65% year-to-date despite the most exciting upgrade in the network’s sev-year history.More importantly, Ethereum’s biggest rival, BNB Chain, suffered a cross-chain security exploit on Oct. 6. The $568 million exploit caused BNB Chain to temporarily suspend all transactions on the network, which holds $5.4 billion in smart contracts deposits.Ether underperformed competing smart contracts like BNB, Cardano (ADA), and Solana (SOL) by 14% since September, even though its TVL in ETH terms increased by 9% during the period. This suggests that the Ethereum network’s issues, such as the $3 average transaction fees, weighed on the ETH price.Ether vs. MATIC, SOL, BNB: Source: TradingViewTraders should look at Ether’s derivatives markets data to understand how whales and market makers are positioned. Options traders remain moderately risk-averseThe 25% delta skew is a telling sign whenever professional traders overcharge for upside or downside protection. For example, if traders expected an Ether price crash, the options markets skew indicator would move above 12%. On the other hand, generalized excitement reflects a negative 12% skew. Ether 60-day options 25% delta skew: Source: Laevitas.chIn layperson’s terms, the higher the index, the less inclined traders are to offer downside risk protection. The indicator has been signaling fear since Sept. 19, when it last held a value below 10%. That day marked the temporary bottom of a 28% weekly correction, as the $1,250 support strengthened after such a test.Long-to-short data show traders adding longsThe top traders’ long-to-short net ratio excludes externalities that might have solely impacted the options markets. By aggregating the positions on the spot, perpetual and quarterly futures contracts, one can better understand whether professional traders are leaning bullish or bearish.There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.Exchanges’ top traders Ether long-to-short ratio. Source: CoinglassBinance displayed a modest increase in its long-to-short ratio between Oct. 13 and 17, as the indicator moved from 1.04 to 1.07 in those four days. Thus, those traders slightly increased their bullish bets.Huobi data shows a stable pattern as the long-to-short indicator stayed near 0.98 the whole time. Lastly, at OKX exchange, the metric plunged to 0.72 on Oct. 13, largely favoring shorts only to rebound to the current 1.00.On average, according to the long-to-short indicator, the top traders from those three exchanges have been increasing long positions since the $1,200 support test on Oct. 13.Skew and leverage are critical to sustaining the $1,250 supportThere was no significant improvement in pro traders’ derivatives positions despite Ether gaining 12% since the Oct. 13 crash down to $1,185. Moreover, options traders fear that a move below $1,250 remains feasible, considering the skew indicator remains above the 10% threshold.If these whales and market makers had firm convictions of a sharp price correction, that would have been reflected in the exchange top traders’ long-to-short ratio.Investors should closely monitor both metrics. The 25% delta skew should remain at 18%, and the long-to-short ratio above 0.80 to sustain the $1,250 support strength. These indicators are a telling sign of whether the bearish sentiment from top traders is gaining momentum.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin margin long-to-short ratio at Bitfinex reach the highest level ever

Sept. 12 will leave a mark that will probably stick for quite a while. Traders at the Bitfinex exchange vastly reduced their leveraged bearish Bitcoin (BTC) bets and the absence of demand for shorts could have been caused by the expectation of cool inflation data.Bears may have lacked confidence, but August’s U.S. Consumer Price Index (CPI) came in higher than market expectations and they appear to be on the right side. The inflation index, which tracks a broad basket of goods and services, increased 8.3% over the previous year. More importantly, the energy prices component fell 5% in the same period but it was more than offset by increases in food and shelter costs.Soon after the worse-than-expected macroeconomic data was released, U.S. equity indices took a downturn, with the tech-heavy Nasdaq Composite Index futures sliding 3.6% in 30 minutes. Cryptocurrencies accompanied the worsening mood, and Bitcoin price dropped 5.7% in the same period, erasing gains from the previous 3 days.Pinpointing the market downturn to a single inflationary metric would be naive. A Bank of America survey with global fund managers had 62% of respondents saying that a recession is likely, which is the highest estimate since May 2020. The research paper collected data on the week of Sept. 8 and was led by strategist Michael Hartnett.Interestingly, as all of this takes place, Bitcoin margin traders have never been so bullish, according to one metric.Margin traders flew away from bearish positionsMargin trading allows investors to leverage their positions by borrowing stablecoins and using the proceeds to buy more cryptocurrency. On the other hand, when those traders borrow Bitcoin, they use the coins as collateral for shorts, which means they are betting on a price decrease.That is why some analysts monitor the total lending amounts of Bitcoin and stablecoins to understand whether investors are leaning bullish or bearish. Interestingly, Bitfinex margin traders entered their highest leverage long/short ratio on Sept. 12.Bitfinex margin Bitcoin longs/shorts ratio. Source: TradingViewBitfinex margin traders are known for creating position contracts of 20,000 BTC or higher in a very short time, indicating the participation of whales and large arbitrage desks.As the above chart indicates, on Sept. 12, the number of BTC/USD long margin contracts outpaced shorts by 86 times, at 104,000 BTC. For reference, the last time this indicator flipped above 75, and favored longs, was on Nov. 9, 2021. Unfortunately, for bulls, the result benefited bears as Bitcoin nosedived 18% over the next 10 days.Derivatives traders were overly excited in November 2021To understand how bullish or bearish professional traders are positioned, one should analyze the futures basis rate. That indicator is also known as the futures premium, and it measures the difference between futures contracts and the current spot market at regular exchanges.Bitcoin 3-month futures basis rate, Nov. 2021. Source: Laevitas.chThe 3-month futures typically trade with a 5% to 10% annualized premium, which is deemed an opportunity cost for arbitrage trading. Notice how Bitcoin investors were paying excessive premiums for longs (buys) during the rally in November 2021, the complete opposite of the current situation.On Sept. 12, the Bitcoin futures contracts were trading at a 1.2% premium versus regular spot markets. Such a sub-2% level has been the norm since Aug. 15, leaving no doubts regarding traders’ lack of leverage buying activity.Related: This week’s Ethereum Merge could be the most significant shift in crypto’s historyPossible causes of the margin lending ratio spikeSomething must have caused short-margin traders at Bitfinex to reduce their positions, especially considering that the longs (bulls) remained flat across the 7 days leading to Sept. 12. The first probable cause is liquidations, meaning the sellers had insufficient margin as Bitcoin gained 19% between Sept. 6 and 12.Other catalysts might have led to an unusual imbalance between longs and shorts. For instance, investors could have shifted the collateral from Bitcoin margin trades to Ethereum, looking for some leverage as the Merge approaches.Lastly, bears could have decided to momentarily close their margin positions due to the volatility surrounding the U.S. inflation data. Regardless of the rationale behind the move, there is no reason to believe that the market suddenly became extremely optimistic as the futures markets’ premium paints a very different scenario from November 2021.Bears still have a glass-half-full reading as Bitfinex margin traders have room to add leverage short (sell) positions. Meanwhile, bulls can celebrate the apparent lack of interest in betting on prices below $20,000 from those whales.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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3 key Ethereum derivatives metrics suggest $1,600 ETH support lacks strength

Ether (ETH) price is up 60% since May 3, outperforming leading cryptocurrency Bitcoin (BTC) by 32% over that span. However, evidence suggests the current $1,600 support lacks strength as network use and smart contract deposit metrics weakened. Moreover, ETH derivatives show increasing sell pressure from margin traders.The positive price move was primarily driven by growing certainty of the “Ethereum merge” transition to a proof-of-stake (PoS) consensus network in September. During the Ethereum core developers conference call on July 14, developer Tim Beiko proposed Sept. 19 as the tentative target date. In addition, analysts expect the new supply of ETH to be reduced by up to 90% after the network’s monetary policy change, thus a bullish catalyst.Ethereum’s total value locked (TVL) has vastly benefited from Terra’s ecosystem collapse in mid-May. Investors shifted their decentralized finance (DeFi) deposits to the Ethereum network thanks to its robust security and battle-tested applications, including MakerDAO (MKR) — the project behind the DAI stablecoin.Total value locked by market share. Source: Defi LlamaCurrently, the Ethereum network holds a 59% market share of TVL, up from 51% on May 3, according to data from Defi Llama. Despite gaining share, Ethereum’s current $40 billion deposits on smart contracts seem small compared to the $100 billion seen in December 2021.Demand for decentralized application (DApp) use on Ethereum seems to have weakened, considering the median transfer fees, or gas costs, which currently stand at $0.90. That’s a sharp drop from May 3, when the network transaction costs surpassed $7.50 on average. Still, one might argue that higher use of layer-2 solutions such as Polygon and Arbitrum are responsible for the lower gas fees. Options traders are neutral, exiting the “fear” zoneTo understand how whales and market makers are positioned, traders should look at Ether’s derivatives market data. In that sense, the 25% delta skew is a telling sign whenever professional traders overcharge for upside or downside protection.If investors expect Ether’s price to rally, the skew indicator moves to -12% or lower, reflecting generalized excitement. On the other hand, a skew above 12% shows reluctance to take bearish strategies, typical of bear markets.Ether 30-day options 25% delta skew: Source: Laevitas.chFor reference, the higher the index, the less inclined traders are to price downside risk. As displayed above, the skew indicator exited “fear” mode on July 16 as ETH broke above the $1,300 resistance. Thus, those option traders no longer have higher odds of a market downturn as the skew remains below 12%. Related: Ethereum will outpace Visa with zkEVM Rollups, says Polygon co-founderMargin traders are reducing their bullish betsTo confirm whether these movements were confined to the specific options instrument, one should analyze the margin markets. Lending allows investors to leverage their positions to buy more cryptocurrency. When those savvy traders open margin longs, their gains (and potential losses) depend on Ether’s price increase.Bitfinex margin traders are known for creating position contracts of 100,000 ETH or higher in a very short time, indicating the participation of whales and large arbitrage desks.Bitfinex ETH margin longs. Source: CoinglassEther margin longs peaked at 500,000 ETH on July 2, the highest level since November 2021. However, data shows those savvy traders have reduced their bullish bets as the ETH price recovered some of its losses. Data shows no evidence of Bitfinex margin traders anticipating the 65% correction from May to sub-$1,000 in mid-June.Options risk metrics show pro traders are less fearful of a potential crash, but at the same time, margin markets players have been unwinding bullish positions as the ETH price tries to establish a $1,600 support. Apparently, investors will continue to monitor the impacts of nominal TVL deposits and demand for smart contracts on network gas fees before making additional bullish bets.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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Bitcoin batters longs as liquidations copy May 2021 run to $30,000

Bitcoin (BTC) has dealt significant pain to bulls in recent weeks, and now, fresh data shows just how much.In a tweet on Jan. 10, on-chain analytics firm Glassnode revealed that those longing BTC had suffered a rerun of last May, when BTC/USD began to fall toward $30,000.Long traders fail to “catch the knife”According to Glassnode’s Longs Liquidations Dominance metric, the “majority” of liquidations over the new year involved longs.This is unsurprising, given Bitcoin’s overall trajectory since late November, but the extent of losses puts the past few weeks on par with May in terms of longs vs. shorts.“Bitcoin long liquidation dominance has hit 69%, the highest level since the May 2021 deleveraging event,” researchers commented. “This means that the majority of liquidations in futures markets over recent weeks were long traders attempting to catch the knife.”Bitcoin futures long liquidations dominance annotated chart. Source: Glassnode/TwitterLooking at the data, the period from late July through late November saw the opposite trend form, with shorters becoming victims of an unexpected bull run multiple times.Unusual lowsWhile long liquidation spikes do not always mark local price bottoms, the appetite for a turnaround on short timeframes has long been vocal. Related: ‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this weekBitcoin, as Cointelegraph reported, is firmly “oversold” by historical standards at current prices.“If we bounce here, I’m not convinced we won’t revisit these prices, but some short-term relief would be nice,” quant analyst Benjamin Cowen tweeted Saturday as part of intraday observations.“Daily RSI is also technically oversold, $40k-$42k is theoretically a support area too.”Cowen was commenting on the Crypto Fear & Greed Index, which hit rare lows of just 10/100 over the weekend, signifying “extreme fear” among market participants.Since bottoming out in the depths of 2018 depression, $BTC has only seen this oversold indicators only four times at 3k, 10k, 4k, and 30k. Not long after these records were achieved, #Bitcoin rallied 340%, 17%, 1585%, 141% accordingly. Full details: https://t.co/qtlKY9tQzS pic.twitter.com/oSpb3fTjKX— CRYPTO₿IRB (@crypto_birb) January 8, 2022Such occurrences tend to be followed by a price and sentiment recovery, but current lows are poignant, as the same price level one year ago was accompanied by the opposite phenomenon — 93/100 or “extreme greed.”

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