Traders Anticipate $3k Ethereum Price, but Derivatives Data Differ

Traders Anticipate $3k Ethereum Price, but Derivatives Data Differ

Despite the fact that ETH has recovered 35% from its $1,750 low, data from derivatives shows that professional traders are not thrilled. Ether (ETH) has rebounded 35% in the previous ten days, regaining the critical $2,300 support level, but the vital $2,450 local peak hasn’t been hit since June 17. The recent uptick can be attributed in part to the London hard fork, which is scheduled to go live on August 4.

Traders and investors perceive the launch of EIP-1559 as a positive factor for Ether price since it is expected to reduce gas costs. However, Ether miners are unhappy with the idea since the proof-of-work method would be rendered obsolete once ETH2.0 is published.

Customers might opt to pay more for quicker confirmation. Network fees will be automatically computed. The additional price is paid for miners (or future validators), but the basic fee is burned. Ether will likely decline in a nutshell. Although it is hard to pinpoint the leading causes of the present increase, the attitude of trading professionals may be gauged by studying indicators of derivatives.

Ether price in USD at Bitstamp. Source: TradingView

If the recent rise in price were enough to build confidence, this change should represent the premium and the skewing of futures contracts and options. The current position of the professional traders may be better understood by looking at the price difference between future and typical local markets.

No Bullish Sentiment

The 3-month term should trade in neutral to buoyant markets with a 6% to 14% annualized premium that matches the stablecoin loan rate. Sellers seek a higher price by delaying settlement, which leads to the price. It is a dangerous indication when the premium for the future decreases or turns negative. This is also referred to as reversal and displays a negative mood.

September Ether futures premium at OKEx. Source: TradingView

The following chart reveals that the Ether future premium became negative on July 20, as Ether reached the $1,750 support level. Even with the enormous increase of $2,450, the September contract premium was insufficient to increase by 1.3% or 8% annualized.

Pro Traders Are Not Bullish Confirms Options Markets

The future annual premium would be at least 12 percent if there were any excitement. As a result, the position of professional traders now seems neutral and bizarre. To avoid externalities specific to the future instrument, traders should examine market choices. Calling (buy) options command a higher price if market makers and whales are hopeful. This modification will adversely affect the 25 percent delta skew indication.

Ether 1-month options 25% delta skew. Source: laevitas.ch

The 25 percent delta skew indicator is good if the downside protection (putting option) is costly—neutral readings in the 10% negative at the 10% positive range. The indicator showed “fear” between May 20 and July 19 but recovered quickly after the $1,750 support was given. However, the current delta skew of 25 percent in negative four does not provide a ‘hungry’ signal. The price in the options market between (buy) and (sell) options is already reasonably balanced.

Neutral readings in the 10% negative at the 10% positive range. The indicator showed “fear” between May 20 and July 19 but recovered quickly after the $1,750 support was given. However, the current delta skew of 25 percent in negative four does not provide a ‘hungry’ signal. The price in the options market between (buy) and (sell) options is already reasonably balanced. Both derivatives show that, although they are far from optimistic, on July 20, professional traders increasingly abandoned their “fear mode.”

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A trader himself, Rossi has 7 years of experience trading in the forex market and the passion for writing has brought him to Newscrypto. He is the perfect combination of market knowledge and writing skills, making him one of the most sought-after writers on cryptocurrency.