ETH falls below $ 3,800, but many traders don’t want to go short at the current levels
Although Ether (ETH) hit an all-time high of $ 4,870 on November 10, the bulls have little reason to celebrate. The 290% increase from early 2021 to today was dwarfed by the 18% drop in prices in December, but the total value of Assets Locked (TVL) in Ethereum smart contracts has increased 9x, at $ 155 billion .
The price history chart of the past few months doesn’t really tell the full story, as a market cap of $ 450 billion helped make Ether one of the top 20 assets in the world behind Johnson & Co. Johnson.
ETH / USDT Daily Chart | Source: TradingView
2021 will be a great year of growth for decentralized exchanges with a daily volume of $ 3 billion, 340% more than last quarter of 2020. However, many well-known traders are confused and tied within a descending parallel channel.
The futures market does not reflect panic selling
To find out the next trend in ETH, we can look at the funding ratio of the futures market. It is usually calculated every eight hours and is used to ensure that the prices of the futures and spot markets do not vary too much. A positive funding rate indicates that buyers (long) are demanding more leverage. However, the reverse situation occurs when sellers (short) demand more leverage.
8 Hour Financing Rate of Ether Perpetual Futures | Source: Coinglass.com
As noted above, the funding rate stayed near zero in December, suggesting balanced leverage demand from buyers and sellers. If there is a moment of panic, it will be displayed on this indicator.
Professional traders bet bullish
Data provided by exchanges shows traders’ long-to-short ratios. By analyzing each client’s position on spots, futures and perpetual contracts, people can better understand whether professional traders are trending up or down.
There are sometimes methodological differences between different exchanges, so viewers should pay attention to changes rather than absolute metrics.
Long-to-short ratio of professional ETH traders | Source: Coinglass
Despite the 9% correction in Ether since December 24th, top traders on Binance, Huobi and OKEx have increased their long leverage. More specifically, Binance is the only exchange facing a slight drop in the long-to-short ratio of top traders. It rose from 0.98 to 0.92. However, that impact was more than offset when the top OKEx traders increased their stakes from 1.67 to 3.20 in one week.
There is currently hardly any sign of a bear market in the market. According to the data, professional traders are currently buying dips, while net retail demand for short positions has changed little over the past month. Of course, no one can accurately predict the next price move, but a look at the data shows that traders have little interest in short selling at current levels.
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