Ether drops below $ 3,800, but traders are unwilling to sell at current levels
Even though Ether (ETH) hit an all-time high of $ 4,870 on November 10, bulls have little reason to cheer. The 290% year-to-date gains were overshadowed by the 18% price drop in December. Yet the value of Ethereum’s network locked in smart contracts (TVL) has increased nine-fold to $ 155 billion.
Examining the price performance chart for the past two months doesn’t really tell the whole story, and Ether’s current market cap of $ 450 billion makes it one of the top 20 tradable assets in the world, just behind the bicentennial conglomerate Johnson & Johnson. .
2021 is expected to be marked by the growth of decentralized exchanges, whose daily volume reached $ 3 billion, a growth of 340% compared to the last quarter of 2020. Yet crypto traders are notoriously short-sighted, accentuating the impact of the current downtrend channel.
Derivatives Markets Do Not Reflect Panic Selling
To understand whether the bearish trend has been instilled, we must analyze the financing rate of futures. Perpetual contracts, also known as reverse swaps, have a built-in rate that is typically billed every eight hours. These measures are established to avoid currency risk imbalances. A positive finance rate indicates that long (long) positions require more leverage.
However, the reverse situation occurs when shorts (sellers) require additional leverage, causing the finance rate to turn negative.
As illustrated above, the eight-hour charge was close to zero in December, indicating balanced leverage demand from buyers and sellers. If there had been moments of panic, it would have been reflected in these derivative indicators.
The best traders increase their bullish bets
The data provided by the stock market highlights the net long-to-short positioning of traders. By analyzing each client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are bullish or bearish.
Sometimes there are discrepancies in methodologies between different exchanges, so viewers should watch for changes rather than absolute numbers.
Despite Ether’s 9% correction since December 24, top traders on Binance, Huobi, and OKEx have increased their leverage longs. To be more precise, Binance was the only exchange facing a modest reduction in the long / short ratio of top traders. The figure fell from 0.98 to 0.92. However, this impact was more than offset by OKEx traders increasing their bullish bets from 1.67 to 3.20 in one week.
Currently, there is hardly any downside sentiment in the market. According to the data, professional traders are buying bearish while retail investor net demand for shorts (selling) has barely changed over the past month. Of course, none of this can predict when Ether will reverse the current descending channel, but one could infer that there is little point in betting on the downside from here.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.