Pro traders curb their enthusiasm until Ethereum confirms $3,400 as support

The Ether (ETH), price rose 11% between March 26-March 29 to $3,480. This is the highest level in 82 consecutive days. The price of Ether (ETH) is currently down 9%, but data supports the belief that altcoins have resumed their uptrend towards a new all time high.

The CoinShares Digital Asset Fund Flows Weekly Report on Tuesday revealed that inflows to crypto products listed on exchanges have reached their highest level in three years. This is a great news for institutional investors. Data revealed that $193 million was the net deposit for investment products in digital assets last week.

The Office of Science and Technology Policy was also launched an investigation to offset the energy consumption related to digital assets. On March 9, President Joe Biden issued an executive order that directed various federal agencies to study the implications of digital assets.

Some of the Ethereum network’s outperformance against Bitcoin can be explained by its planned move to Proof-of-Stake. Although Q1, 2022 was included on the official roadmap, this transition has been delayed multiple times. Ethereum intends to be more efficient, allow faster transactions and eliminate the cost of digital mining.

Even with the expectation of the PoS upgrade being announced, the rally over the past three days is not enough for Ether pro traders and derivatives metrics to make them bullish.

The Ether futures premium has a neutral value

Ether’s options and futures market data can help you understand the position of larger traders. The basis indicator, for example, measures the difference between current spot market levels and longer-term futures contracts.

To compensate traders who “lock in” the money for the two- to three month period before the contract expires, the annualized premium for Ether futures should be between 5% to 10%. Low levels below 5% indicate bearishness, and high numbers over 10% indicate excessive longs (buyers) demand.

Annualized premium for Ether 3-month futures. Source: Laevitas

The chart above shows that Ether’s basis indicator has recovered from 2% on March 13, to the current level of 6%. This level is above the 5% threshold for bear sentiment, but it also signals a weak demand to open ETH futures longs.

The metric suggests a neutral-to–bearish sentiment. However, Ether is still down 9% year to date and 28% below its $4800 all-time high.

Options traders worry that ETH could fall lower

The 25% options delta-skew is very useful because it indicates whether arbitrage desks or market makers are charging too much for downside protection.

The skew indicator will rise above 10% if option investors are worried about Ether’s price crash. Generalized excitement, on the other hand, reflects a negative 10% Skew.

Related: Waiting for the executive order: How users and financial professionals might benefit

Ether 30-day options 25% delta-skew: Source: Laevitas

On March 18, the skew indicator fell below 10%, exiting the “fear level” as options traders are not charging too much for downside protection. The current level of 7% is close to the bearish threshold.

The indicator remained neutral, despite a slight increase in Ether’s futures price. ETH options markets price a slightly higher risk of downside so professional traders don’t believe the $3,400 support will continue.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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