The price of Ether (ETH) was up 32% through Aug 23, and despite having hit the $ 3,000 level several times, the level has held firmly. Meanwhile, Bitcoin (BTC) was unable to sustain the $ 50,000 mark, at least in the short term. According to Cointelegraph, professional traders are not yet inclined to add bullish positions based on derivatives metrics.
Surprisingly, the opposite situation appears when looking at the sentiment of Ether traders, who currently show a reasonable degree of confidence in the current price level.
Regulatory Pressure and Impressive NFT Growth Support Trader Confidence
On Monday, Dawn Stump, Commissioner of the US Commodity Futures Trading Commission (CFTC), I declare that:
“A trading platform that offers derivatives on digital assets to US persons without registering, or in violation of CFTC trading rules, is subject to the enforcement authority of the CFTC.”
It’s unclear why Bitcoin and Ether’s reaction to the news would be different, but it’s worth noting that Commissioner Stump is just one of four to six CFTC members on panels that regulate commodities.
In the meantime, Payment processor giant Visa surprised the NFT market by announcing the purchase of a CryptoPunk for $ 150,000. Cuy Sheffield, the head of crypto for the $ 500 billion company, said:
“With our purchase of a CryptoPunk, we are going in foot first. This is just the beginning of our work in this space.”
For those of you unfamiliar, The Ethereum network controls most of the NFT industry, and a single marketplace called OpenSea has processed over $ 1 billion worth of transactions in the past 30 days.
Professional traders go from neutral to bullish based on the futures market
To understand how bullish or bearish professional traders are, you have to analyze the base rate of futures. The basis is also often referred to as the futures premium, and it measures the difference between long-term futures contracts and current levels of the spot market.
In healthy markets an annualized premium of 5% to 15% is expected, in a situation known as contango. This price difference is due to sellers demanding more money to postpone the sale for longer.
Nevertheless, This indicator disappears or turns negative during bear markets and displays a red flag known as “backwardation”.
As shown above, the current 11% annualized premium is neutral, but much better than a month ago, when the metric was below 5%. However, a healthy market does not need excessive optimism on the part of professional traders, which often ends up with excessive leverage in long positions and a base rate above 15%.
Options traders have flirted with “greed”
To exclude the specific externalities of the futures instrument, one must also analyze the options markets.
The 25% slope of the delta compares similar call and put options. The metric will turn positive when fear prevails, as the protection premium for put options is higher than for similar risk call options.
The opposite occurs when market makers are bullish, causing the indicator of the 25% slope of the delta to move into the negative zone. Readings between -8% and + 8% are generally considered neutral.
Notice how Ether options traders have been flirting with the “greed” level since August 7, when the indicator fell below the -8 threshold. This data validates the premium for futures contracts, which has improved in the last two weeks and is currently maintaining a healthy “neutral” level.
Derivatives data shows that the most active professional traders trading quarterly Ether futures and options are comfortable today.
The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Cointelegraph.com. Each investment and commercial movement involves risks, you must do your own research when making a decision.