The Ether (ETH), price rebounded more than 20% from its February 22 low of $2,300. However, derivatives data showed that investors remain cautious. Ether (ETH) is currently down 24% over the past year. Key overhead resistances lie ahead.
High network transaction fees have been Ethereum’s biggest problem. Investors are becoming increasingly concerned that this issue will continue to be a problem even after the network integrates its long-awaited upgrades.
The 7-day network average transaction fees are still higher than $18, but the network value locked into smart contracts (TVL), decreased 25% to $111 trillion between Jan. 1 & Feb. 27. This could partly explain why Ether has been trending downwards since February.
Price of Ether/USD at FTX. Source: TradingView
The resistance level for the above channel is currently at $3,100. However, the daily closing price support is at $2,500. To reverse the downward trend, 14% must be rallied from the $2,750 level.
Fear is the dominant sentiment in derivatives markets
The 25% delta skew is an indicator that compares the equivalent call (buy) or put (sell). Because the protective put options premium exceeds the call options, the indicator will turn positive if “fear” is present.
When market makers are bullish, the opposite is true. The 25% delta skew will shift to the negative. Normally, readings between negative 8 and positive 8 are considered neutral.
Deribit Ether 30-day options 25% delta-skew Source: laevitas.ch
As Ether fails to break the $3,000.00 resistance, Ether option traders have been signaling their bearishness since February 11. The chart above shows this. Despite the 7.5% price rise on February 28, the 8.5% current reading does not reflect confidence from market indicators and whales.
The long-to-short net position of traders is highlighted by exchange-provided data. It is possible to determine whether professional traders are bullish or bearish by analyzing the position of every client on spot, perpetual, and futures contracts.
Sometimes there are methodological differences between exchanges. Therefore, viewers should pay attention to changes and not absolute numbers.
Top traders in exchanges Ether long-to–short ratio Source: Coinglass
Despite Ether’s 21.5% rally from Feb. 24, traders on Binance and Huobi have reduced their leverage longs despite this. Huobi was the only exchange to see a slight decrease in top traders’ long/short ratio, as the indicator moved 1.04 to 1.07.
This was compensated for by OKX traders increasing bullish bets to 1.58 between Feb. 24 and 28. Over the last four days, top traders have seen their longs decrease by an average of 8%.
Surprisingly, top traders might be caught.
The Ether market is not perceived as bullish from the standpoint of the above metrics. Data suggests that traders who are not willing to take long positions, as indicated by options and futures markets, aren’t keen on adding them.
Even professional traders can make mistakes. A short cover should be taken if Ether breaches the $3,100 resistance channel. It’s important to recognize, however, that there is little interest in buying derivatives at this level.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.