Ethereum (ETH) has sent investors on a roller coaster ride over and over again over the past three months as the price has risen twice. First, it hit an all-time high (ATH) of $ 4,870 on November 10 and $ 4,780 on December 1. However, the double high was quickly rejected hard, resulting in $ 490 million in long futures positions being liquidated within 48 hours.

Hope was rekindled on December 8th after Ether rose 28.5% in four days to retest the $ 4,400 support. Shortly thereafter, the downtrend resumed, dropping to a low of $ 2,900 on Jan. 10, its lowest level in 102 days.

$ 2,900, down 40% from ATH, leaves traders questioning whether a bear market has established itself.

ETH / USD price chart | Source: TradingView

It is possible for some to argue that Ether is simply following Bitcoin’s 42% correction from its ATH of $ 69,000 on November 10, and the recent decline is partly attributed to austerity) as well as the effects of political instability in Kazakhstan impacted mining.

There are some notable developments amid the downturn, such as China’s official digital yuan wallet becoming the most downloaded app in local mobile app stores on June 10th. 10/1. In addition, an experimental version of the central bank digital currency (CBDC) is being used in several cities and will also be available for download in app stores from January.

Even with fiscal pressure and declining price movements, investors should keep an eye on futures premiums (base rate) to analyze how bullish / bearish prices are for professional traders.

Futures traders are getting more nervous

The base rate measures the difference between a longer-term futures contract and the current spot market price. An annual premium of 5 to 15% is expected in healthy markets. This difference in price is due to the fact that the seller is charging more money in order to delay the payment longer.

However, a red alert always pops up whenever the indicator fades or goes negative, a situation known as “moving backwards”.

3-month base rate for ETH futures | Source: Laevitas.ch

The ratio peaked at 20% on November 8 when ether broke the $ 4,800 mark, but then gradually fell to 8% on December 5 after the price fell to $ 3,480. When Ether hit a low of $ 2,900 on Jan. 10, the base rate fell to 7%, a 132-day low.

As a result, professional traders are uncomfortable despite Ether rebounding 10% to $ 3,200 in January.

Options traders have recently become neutral

In order to rule out external factors, especially in the case of futures, investors should also analyze the options markets. The 25% delta deviation compares similar call and put options. The metric becomes positive when fear prevails, as the put premiums are higher than those of call options, with similar risk.

The opposite happens when greed is the prevailing sentiment that causes the 25% delta deviation indicator to go negative.

25% deviation Delta 30 days ETH option | Source: TradingView

Whenever market makers and whales go bearish, the 25% delta deviation indicator becomes positive, and indicators between -8% and 8% are generally considered neutral.

Ether options traders got “scared” on January 8th when the 25% delta deviation exceeded the 8% threshold and peaked at 11% two days later. However, the rapid rebound from the $ 2,900 mark instilled confidence in ether options traders and also pushed the fear and greed index of the options contract down 3%.

There is currently no consensus among ether traders as the futures market is a little disappointing and options arbitrage and whales have recently given up their bearish stance. This makes sense as the current price level of $ 3,200 is still reflecting a recent weekly drop of 15%.

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