Cryptocurrency News

Ethereum price bounces back to $2.6K, fails to excite neutral-to-bearish traders


Speaking at the Virtual Fintech Forum in Hong Kong on May 27, Vitalik Buterin, co-founder of Ethereum, commented on the hurdles related to the Ethereum 2.0 rollout. Buterin said that there have been several internal team conflicts over the past five years and as a result, he Confirmed that Ethereum 2.0 launch unlikely before the end of 2022.

In a Goldman Sachs report on May 22, analysts said that Ether Has “High Chances of Overtaking Bitcoin” In addition, the report noted the growth of the decentralized finance (DFI) sector and the non-fungible token (NFT) ecosystem being built on Ethereum. Coincidentally, the very next day, Ether The price was nearing a low of $1,750.

On June 14th, CoinShares released its weekly fund flow report and Ether investment products had the biggest outflow, totaling $12.7 million.

although Next $1.5 billion options expire on June 25 According to Cointelegraph, there could be a turning point for Ether. This figure is 30% higher than at the end of March 26, in which the price of Ether fell 17% in five days and was below $1,550.

Top ether traders have been unable to convert their neutral-to-bearish positions according to derivatives data, despite flirting with $2,600 after a 12% rally over the past week.

3-month futures premium is neutral-to-bearish

Generally, TTE 3-month futures will usually be traded at a premium to regular spot exchanges. In addition to the exchange liquidity risk, the seller is postponing settlement and typically charges higher fees.

The 6% to 17% annualized return on stablecoin lending whenever the 3-month premium trades above that range indicates bullishness. On the other hand, when futures are trading below the stablecoin lending rate, it is a sign of short-term bearish sentiment.

Huobi ETH September futures premium vs. spot market. Source: TradingView

As shown above, the 8% premium – 26% yearly – disappeared on May 13, indicating extreme optimism. Since then, it has stayed close to 2.8%, which equates to 10% annually. Thus, top traders are neutral-to-bearish according to this indicator as it is near the low of the expected range.

Option skew shows moderate signs of fear

The 25% delta skew compares similar call (buy) and put (sell) options and will turn positive when the protective put option premium is trading higher. Whenever this metric exceeds 10%, it is considered a “fear” indicator.

The opposite occurs when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range.

Deribit Ethereum Options 25% Delta Skew. Source: laevitas.ch

From May 20 to June 8, the indicator was close to 10%, indicating a higher protective put premium, which is usually a ‘fear’ indicator. However, in the past week, within the “neutral” range, it has improved slightly to 7%, but is still close to bearish sentiment.

There is no evidence of bullish sentiment among top traders as Ether tested the $2,600 resistance. So unless these indicators turn neutral-to-bullish, traders should act with extreme caution before concluding that a bull is in the market.

The views and opinions expressed here are those of only those Author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.