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

ether (ETH), the price surged 11% to $3,480 between March 26 and March 29, its highest level in 82 days. Currently, the price is down 9% year-to-date, but does the data support the assumption that the altcoin has resumed its uptrend towards a new all-time high?

Institutional investors seem excited that Tuesday’s CoinShares Digital Asset Fund Flows Weekly Report revealed that inflows into exchange-traded crypto products hit the highest level in three months. Data showed that investment products saw digital assets Net deposits of $193 million last week.

At the same time, the Office of Science and Technology Policy, an executive office of the President of the United States, started Study on balancing energy consumption related to digital assets. Also on March 9th US President Joe Biden signed an executive order Directing various federal agencies to investigate the impact of digital assets.

Those of the Ethereum network planned transition to proof-of-stake consensus can also explain some of its outperformance versus bitcoin. The transition has been delayed multiple times, despite mentioning Q1, 2022 on the official roadmap. By removing the burden of digital mining, Ethereum plans to become more efficient and enable cheaper and faster transactions.

Even with the anticipation of the PoS upgrade, the rally over the past 3 days is not enough to make Ether Pro traders go bullish according to derivatives metrics.

Ether futures premium is neutral

To understand how larger traders are positioned, look at Ether’s futures and options market data. For example, the basic indicator measures the difference between longer-dated futures contracts and current spot market levels.

The annualized premium of ether futures should be between 5% and 10% to compensate traders for “locking” the money for two to three months until the contract expires. Levels below 5% are bearish, while figures above 10% indicate excessive demand from long positions (buyers).

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Annualized Premium for Ether 3 Month Futures. Source: Laevitas

The chart above shows that Ether’s base indicator has recovered from 2% on March 13 to 6% currently. This level surpasses the 5% threshold of bearish sentiment, but at the same time signals weak demand for opening ETH futures longs.

While the metric suggests a neutral to bearish sentiment, it’s important to remember that Ether is down 9% year-to-date and 28% below its all-time high of $4,800.

Options traders fear ETH could tumble lower

The 25% options delta skew is extremely useful as it shows whether arbitrage desks and market makers are overcharging for upside or downside protection.

When options investors fear an ether price crash, the skew indicator moves above 10%. On the other hand, general excitement reflects a negative 10% skewness.

Related: Waiting for the executive order: how users and financial professionals can benefit

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

The skew indicator fell below 10% on March 18th, exiting the “fear” level as these options traders are no longer overcharging for downside price protection. The current level of 7% remains close to a bearish threshold.

Although Ether’s futures premium improved slightly, the indicator remains neutral. Basically, ETH options markets are pricing in a slightly higher downside risk, so professional traders are not confident that the current $3,400 support will hold.

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