Although two important Ethereum price indices have yet to turn negative, it won’t take much for ETH to fall below $1,000.
The price of Ether (ETH) has dropped 37.5 percent in the previous seven days, and engineers have opted to postpone the network’s transition to proof-of-stake (PoS) consensus. This improvement is expected to put a stop to the six-year-long reliance on proof-of-work (PoW) mining and the Merge scalability solution.
Despite a market-wide downturn in the cryptocurrency sector, competing smart contracts like as BNB, Cardano (ADA), and Solana (SOL) have beaten Ether by 13 percent to 17 percent since June 8. This implies that the Ethereum network’s difficulties weighed on the ETH price as well.
The “difficulty bomb” functionality was added to the code in 2016 during the development of the new consensus mechanism (previously Eth2). During the so-called “DeFi summer,” Ethereum’s average transaction costs topped $65, which irritated even the most ardent users. This is why the Merge is so crucial in the eyes of investors and, as a result, the Ether price.
Options traders remain extremely risk-averse
To see how whales and market makers are positioned, traders could look at Ether’s derivatives markets data. When professional traders overcharge for upside or downside protection, the 25 percent delta skew is a red flag.
If traders predicted the price of Ether to fall, the skew indicator would rise above 10%. Generalized excitement, on the other hand, has a negative 10% skew. This is why the statistic is known as the professional traders’ fear and greed metric.
On June 16, the skew indicator improved, albeit briefly, reaching 19 percent. However, as it became clear that breaking through the $1,200 barrier would take longer than predicted, the skew statistic returned to 24 percent. The higher the index, the traders are less likely to price downside risk.
Long-short data indicates that traders are not interested in shorts.
The long-to-short net ratio of the best traders eliminates externalities that may have only impacted the options markets. By examining these holdings on spot, perpetual, and quarterly futures contracts, it is possible to determine if professional traders are bullish or bearish.
Because there are certain methodological differences between different exchanges, viewers should focus on changes rather than absolute data.
Despite the fact that Ether has failed to hold the $1,200 support level, experienced traders did not modify their holdings between June 14 and 16, according to the long-to-short indicator.
Binance’s long-to-short ratio increased somewhat during the course of two days, rising from 1.11 to 1.22. As a result, those traders upped their bullish bets marginally.
Huobi data demonstrates a consistent pattern, with the long-to-short indication being close to 1.00 throughout. Finally, at the OKX exchange, the measure oscillated dramatically throughout the period but finished practically constant at 1.04.
Prepare for the worst while hoping for the best.
Despite Ether’s drop below $1,012 on June 15, there hasn’t been a major shift in whales’ and market makers’ futures positions. However, options traders are concerned that a drop below $1,000 is still possible, but the negative newsflow has a significant impact on pricing.