The Ether (ETH), price has fallen 37.5% over the past seven days. Recent news reports said that developers delayed the migration of the network to a Proof-of-Stake (PoS), consensus. This upgrade will end the dependence on proof-of work (PoW), mining, and the Merge scaling solution that has been pursued over the past six years.
Despite a market correction, competing smart contracts such as Solana (SOL), Cardano (ADA), and Cardano (ADA), outperformed Ether 13% to 17% over the past June 8, despite Ether’s decline. This indicates that the Ethereum network’s problems also weighed down the ETH price.
As plans were being made for the new consensus mechanism (formerly Eth2), the “difficulty Bomb” feature was added to the code. The average transaction cost for Ethereum at the height of “DeFi Summer” was $65, which was a frustrating figure for anyone who used it. This is exactly why the Merge is so important in investors’ eyes. It also affects Ether price.
Option traders are still extremely risk-averse
Ether’s derivatives market data should be reviewed by traders to see how market makers and whales are positioned. Professional traders often overcharge for downside or upside protection. The 25% delta skew indicates this.
The skew indicator would rise above 10% if traders anticipated an Ether price crash. Generalized excitement, on the other hand, reflects a skew of 10%. This is why the metric is also known as the pro traders fear and greed metric.
Ether 30-day options 25% delta-skew: Source: Laevitas.ch
On June 16, the skew indicator reached 19%, which was a slight improvement. The skew indicator climbed back up to 24% after it became clear that climbing above $1,200 would be more difficult than anticipated. The lower the index, the more inclined traders will be to price downside risk.
Traders aren’t interested in shorts, according to long-to-short data
The long-to-short net ratio of top traders does not include externalities that could have only impacted the options market. Analyzing these positions on the spot and quarterly futures contracts will help you to understand whether professional traders are bullish or bearish.
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
According to the indicator, although Ether failed to maintain the $1,200 support level, professional traders didn’t change their positions between June 14-16.
Binance saw a slight increase in its long/short ratio. The indicator moved from 1.11 and 1.22 in just two days. These traders increased their bullish bets slightly.
Huobi data shows that the long-to short indicator remained at 1.01 throughout the period. This is consistent with Huobi data’s findings. OKX exchange saw the metric fluctuate dramatically over the course of the period, but it ended almost unchanged at 1.04.
You can hope for the best but be prepared for the worst
Overall, there hasn’t been any significant change in whales’ and market maker’s futures positions, despite Ether’s plunge to $1,012 June 15. Options traders worry that Ether could crash below $1,000, but negative newsflow strongly influences price.
If market makers and whales had shown that there was a deeper correction in prices, it would have been reflected by the long-to-short ratio of top traders on the exchanges.
According to the old saying, “follow their action, not their words”, traders must be ready for sub-$1,000 Ether but not as the base scenario.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.