Derivative data shows Ethereum traders are positioned to expand the ETH rally

The price of Ether (ETH) rose 32% through Monday and although the $ 3,000 support was tested multiple times, the level has held steady. Meanwhile, Bitcoin (BTC) was unable to hold the $ 50,000 mark, at least in the short term. According to Cointelegraph, professional traders do not yet tend to add bullish positions according to the derivatives metrics.

Surprisingly, the opposite situation emerges when looking at the sentiment of ether traders who are currently showing a reasonable level of confidence in the current price level.

Regulatory pressures and spectacular NFT growth are building traders’ trust in ether

On Monday, Dawn Stump, an agent for the Commodity Futures Trading Commission, stated:

“A trading platform that offers US persons derivatives on digital assets without registering or violating the CFTC’s trading rules is subject to the CFTC’s enforcement agency.”

It’s unclear why Bitcoin’s and Ether’s response to the news would be different, but it’s worth noting that Commissioner Stump is only one of four to six CFTC members on commodities regulating bodies.

Meanwhile, payment service provider Visa surprised the NFT market by announcing a $ 150,000 acquisition of CryptoPunk. Cuy Sheffield, head of crypto at the $ 500 billion market cap firm, said:

“With our CryptoPunk purchase, we will jump into our feet first. This is just the beginning of our work in this area. “

To the stranger, the Ethereum network is the absolute leader in the NFT segment, and one single marketplace, OpenSea, has processed more than $ 1 billion in transactions in the past 30 days.

Ether (ETH) price in USD on Kraken. Source: TradingView

According to futures markets, pro traders are neutral to bullish

To understand how bullish or bearish professional traders tend to be, one should analyze the futures base rate. The basis is often referred to as the futures premium and measures the difference between longer-term futures contracts and the current spot market level.

In healthy markets, an annualized premium of 5 to 15% is expected in a situation known as contango. This price difference is caused by sellers asking for more money in order to withhold settlement longer.

However, this indicator fades or turns negative during bearish markets and has flashed a red flag known as a “backward move”.

Bitcoin 3-month futures on an annual basis. Source:

As shown above, the current annualized premium of 11% is neutral, but much better than it was a month ago when the metric was below 5%. Still, a healthy market doesn’t need excessive optimism from professional traders, which usually ends with excessive leverage longs and a base rate in excess of 15%.

Options traders flirt with “greed”

In order to rule out external effects specific to the futures instrument, one should also analyze options markets.

The 25% delta skew compares similar call (buy) and put (sell) options. The metric becomes positive when fear prevails, as the premium for protective put options is higher than for similar risk call options.

The opposite is true when market makers are bullish, which causes the 25% Delta Skew indicator to shift into negative territory. Readings between minus 8% and plus 8% are usually considered neutral.

Deribit ETH options 25% delta skew. Source: Laevitas

Notice how ether option traders have been flirting with the “greed” level since August 7th, when the indicator fell below the negative 8% threshold. These data confirm the futures contract premium, which has improved over the past few weeks and is currently holding healthy “neutral” levels.

Derivative data shows that the pro traders who are more active in quarterly futures and ether options trading are comfortably seated at the time of writing.

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

Comments are closed.