Ethereum is aiming for $3,000, but professional traders don’t want long
Although Ethereum (ETH) price is up more than 20% from $2,300 on Feb. 22, data from the derivatives market suggests investors remain cautious. So far, Ether price is down 24% year-on-year and key resistance levels are still ahead.
Ethereum’s most pressing concern is the network’s high transaction fees, and investors are increasingly concerned that this will remain an issue even after the network integrates its long-awaited upgrades.
For example, the network’s average transaction fee stayed above $18 over the past 7 days, while the total value (TVL) in smart contracts fell 25% from January to February 27 to $111 billion. This indicator could partially explain why Ethereum has been in a downtrend since the beginning of February.
Ethereum/USD price chart in daily frame | Source: TradingView
The downtrend channel is currently showing resistance at $3,100 while the daily close support stands at $2,500. Therefore, Ethereum needs to rally 10% from $2,947 to invalidate the downtrend.
The futures market shows that fear is omnipresent
The 25% delta difference compares the corresponding call and put options. The indicator turns positive when “fear” prevails because the put premium is higher than the call premium.
The opposite happens when market makers are bullish, causing the 25% delta deviation to become negative. Results between -8% and +8% are generally considered neutral.
25% Delta Deviation of Ether Option | Source: laevitas.ch
The chart above shows that ether options have been signaling a recession since February 11th, just when Ethereum price failed to break the $3,200 resistance. Additionally, a 25% delta divergence at 8.5% right now shows market makers and whales lack confidence despite a 7.5% price rally on the 2nd.
The data provided by the exchange highlights traders’ long-to-short ratios. By analyzing each client’s position in the spot, futures and perpetual markets, it is possible to determine the psychology of professional traders.
There are sometimes methodological differences between different exchanges, so viewers should pay attention to changes rather than absolute readings.
Long to short ether ratio of professional traders on exchanges | Source: coin jar
Even with Ether’s 21.5% surge since Feb. 24, professional traders on Binance, Huobi, and OKX have reduced leveraged longs. Huobi was the only exchange to see a slight decrease in this ratio as the indicator rose to 1.04 from 1.07.
Meanwhile, traders on OKX increased their bullish odds from 1.58 to 2.15 from 24th February to 28th February. On average, professional traders reduced their buy orders by 8% in four days.
From the perspective of the metrics discussed above, there is hardly any bullish sentiment in the ether market. In addition, data shows that professional traders are reluctant to enter long positions, as reflected in both the futures and options markets.
Of course, even professional traders are wrong and short coverage (the purchase of borrowed securities to close open short positions to offset a gain or loss) will occur if Ether breaks the $3,100 resistance of the current downtrend channel. However, at current levels, there is little interest in buying with derivatives.
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Although Ethereum (ETH) price is up more than 20% from $2,300 on Feb. 22, data from the derivatives market suggests investors remain cautious. So far, Ether price is down 24% year-on-year and key resistance levels are still ahead.
Ethereum’s most pressing concern is the network’s high transaction fees, and investors are increasingly concerned that this will remain an issue even after the network integrates its long-awaited upgrades.
For example, the network’s average transaction fee stayed above $18 over the past 7 days, while the total value (TVL) in smart contracts fell 25% from January to February 27 to $111 billion. This indicator could partially explain why Ethereum has been in a downtrend since the beginning of February.
Ethereum/USD price chart in daily frame | Source: TradingView
The downtrend channel is currently showing resistance at $3,100 while the daily close support stands at $2,500. Therefore, Ethereum needs to rally 10% from $2,947 to invalidate the downtrend.
The futures market shows that fear is omnipresent
The 25% delta difference compares the corresponding call and put options. The indicator turns positive when “fear” prevails because the put premium is higher than the call premium.
The opposite happens when market makers are bullish, causing the 25% delta deviation to become negative. Results between -8% and +8% are generally considered neutral.
25% Delta Deviation of Ether Option | Source: laevitas.ch
The chart above shows that ether options have been signaling a recession since February 11th, just when Ethereum price failed to break the $3,200 resistance. Additionally, a 25% delta divergence at 8.5% right now shows market makers and whales lack confidence despite a 7.5% price rally on the 2nd.
The data provided by the exchange highlights traders’ long-to-short ratios. By analyzing each client’s position in the spot, futures and perpetual markets, it is possible to determine the psychology of professional traders.
There are sometimes methodological differences between different exchanges, so viewers should pay attention to changes rather than absolute readings.
Long to short ether ratio of professional traders on exchanges | Source: coin jar
Even with Ether’s 21.5% surge since Feb. 24, professional traders on Binance, Huobi, and OKX have reduced leveraged longs. Huobi was the only exchange to see a slight decrease in this ratio as the indicator rose to 1.04 from 1.07.
Meanwhile, traders on OKX increased their bullish odds from 1.58 to 2.15 from 24th February to 28th February. On average, professional traders reduced their buy orders by 8% in four days.
From the perspective of the metrics discussed above, there is hardly any bullish sentiment in the ether market. In addition, data shows that professional traders are reluctant to enter long positions, as reflected in both the futures and options markets.
Of course, even professional traders are wrong and short coverage (the purchase of borrowed securities to close open short positions to offset a gain or loss) will occur if Ether breaks the $3,100 resistance of the current downtrend channel. However, at current levels, there is little interest in buying with derivatives.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
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