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

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

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

Institutional investors seem excited that the CoinShares Digital Asset Fund Flows Weekly Report revealed on Tuesday that the exchange-listed crypto products inflows reached the highest level in three months. Data showed that investment products for digital assets saw net deposits of $193 million last week.

Our top trading bots

At the same time, the Office of Science and Technology Policy, an executive office of the President of the United States, launched a study to offset energy use related to digital assets. Furthermore, on March 9, U.S. President Joe Biden signed an executive order directing various federal agencies to examine the implications of digital assets.

The Ethereum network's planned move to Proof-of-Stake consensus can also explain some of its outperformance versus Bitcoin. The transition has been postponed multiple times, although Q1, 2022 was mentioned on the official roadmap. By eliminating the burden of digital mining, Ethereum plans to become more efficient and allow cheaper and faster transactions.

Even with the anticipation of the PoS upgrade, the rally of the past 3 days is not enough to cause Ether pro traders to flip bullish according to derivatives metrics.

The Ether futures premium is neutral

To understand how larger-sized traders are positioned, one should look at Ether's futures and options market data. For instance, the basis indicator measures the difference between longer-term futures contracts and the current spot market levels.

The annualized premium of Ether futures should run between 5% and 10% to compensate traders for "locking in" the money for two to three months until the contract expires. Levels below 5% are bearish, while numbers above 10% indicate excessive demand from longs (buyers).

Pro traders curb their enthusiasm until Ethereum confirms $3,400 as support
Ether 3-month futures’ annualized premium. Source: Laevitas

The above chart shows that Ether's basis indicator recovered from 2% on March 13 to the current 6%. This level exceeds the 5% bear sentiment threshold but at the same time signals a weak demand for opening ETH futures longs.

Even though the metric points to a neutral-to-bearish sentiment, one must remember that Ether remains down 9% year-to-date and 28% below its $4,800 all-time high.

Options traders fear ETH could drop 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.

If option investors fear an Ether price crash, the skew indicator will move above 10%. On the other hand, generalized excitement reflects a negative 10% skew.

Related: Waiting on the executive order: how users and financial professionals may benefit from it

Pro traders curb their enthusiasm until Ethereum confirms $3,400 as support
Ether 30-day options 25% delta skew: Source: Laevitas

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

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

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

Keep reading upon Cointelegraph
Bitcoin spikes above $40K as potential ‘positive shifts’ arise between Russia and Ukraine
Bitcoin (BTC) saw instant volatility on March 11 amid the hope that the Russia–Ukraine conflict could find a diplomatic solution.BTC/USD 1-hour candle chart...
YGG-backed Oasys blockchain hopes to take P2E gaming mainstream
The team behind the new gaming-focused proof-of-stake blockchain Oasys say that it’s been designed to increase mainstream play-to-earn (P2E) adoption.The...
Here’s why Bitcoin traders shouldn’t overanalyze US inflation data
Analysts and pundits will scramble to find some angle to explain intra-day price action whenever important economic numbers are published and this practice...
The virus killer: How blockchain contributes to the fight against COVID-19
On Jan. 30, the South China Morning Post reported that one of the largest Asian pharmaceutical companies, Zuellig, had launched a blockchain-based system...
Near Protocol raises $150M to promote Web3 adoption
Proof-of-stake blockchain Near Protocol has raised $150 million in seed investments to accelerate the adoption of Web3 technologies. The team announced...
DigitalArt4Climate announce competition winners at COP26
A panel of thought leaders and blockchain visionaries from around the globe converged in Glasgow, Scotland on Nov. 11 for the United Nations Climate Change...
Compounding problems: $65m more COMP at risk as devs wait for time-locked bug fix
Major DeFi money market Compound’s woes are worsening, with nearly $150 million worth of COMP now at risk due to a buggy upgrade to the protocol that went...
SEC takes action against Chinese billionaire's companies over $500M offerings
The United States Securities and Exchange Commission (SEC) has charged three of Chinese billionaire Guo Wengui’s companies over an initial coin offering...
Arbitrum’s TVL surges to $1.5B as DeFi degens ape into ArbiNYAN
Ethereum layer-two rollup network Arbitrum One is beginning to see significant growth, with its total value locked (TVL) surging by roughly 2,300% this...
Caitlin Long takes aim at The New York Times over crypto 'alarm' article
Avanti Bank and Trust CEO Caitlin Long has posted a rebuttal to a recent New York Times article claiming that crypto and decentralized finance is “disrupting...
Crypto staking rewards and their unfair taxation in the US
The United States Internal Revenue Service (IRS) stretches the tax rules to fit its cryptocurrency agenda. At no time in tax history has pure creation been...
Filecoin ignores Elon Musk’s Bitcoin FUD as FIL price rockets by 17%
FIL, the native crypto asset of the Filecoin network, was among the best performing digital assets Friday as it maintained its gains against a very bearish...
Combined DEX liquidity tags new all-time high of $10 billion
The amount of collateral on decentralized exchanges is nearing a milestone high of $10 billion, with Uniswap still sitting at the top of the heap.Volumes...
Ripple’s CEO Says “Bitcoin’s Controlled By China,” Bashes Blockchain Hype
While crypto-enthusiasts keep going crazy about blockchain-bitcoin stuff, Ripple’s CEO Brad Garlinghouse tries to cool things down. As a leader of a company...
Steven Seagal Became The Face Of The Dubious ICO 'Bitcoiin'
Hollywood actor Steven Seagal became the international ambassador of a Bitcoiin2Gen project; his participation is actively used by the creators of the...