ETH futures data suggest that optimistic traders are growing more at ease with the $1,700 price level, opening the door for more rallies.
From February 13 and February 16, the price of Ether increased 18%, but since then, it has been fluctuating around the $1,700 mark. Despite the recent price increase, the metrics for Ether futures are still neutral to optimistic as investors consider the more stringent regulatory landscape and the possible effects of Ethereum's Shanghai upgrade.
Regulation is now the top issue for investors, especially since the Financial Stability Board (FSB) of the UK recently declared that the majority of stablecoins do not adhere to international requirements.
The organization is linked to the Bank of International Settlements and was established by the G20 (BIS). The right regulation of crypto assets should be "based on the idea of the same activity, same risk, and same regulation," according to FSB chair Klaas Knot.
In other encouraging news, China has allegedly improved since the government is apparently adopting a more accommodating stance toward Hong Kong's ambitions to become a global center for cryptocurrency. Representatives from China have reportedly been attending crypto events in Hong Kong often in order to study the workings of the local crypto market, Bloomberg article from February 20 claims.
The state of Ether staking was discussed in length in a recent Binance report, which also looked into why the Shanghai upgrade would not lead to the ETH sell pressure that some traders had feared. They base their argument on liquid staking derivatives, which let users profit from staked Ether while still having the option to sell the derivative token. To determine if the $1,700 price rejection has affected the attitude of crypto investors, let's examine the data for Ether futures.
More Demand for Leveraged Longs is Seen in ETH Futures
In healthy markets, the annualized premium for two-month futures should trade between 4% and 8% to cover expenses and related risks. Yet, it is a negative indication when the contract trades at a discount to conventional spot markets since it demonstrates a lack of confidence on the part of traders.
Premium on 2-month ether futures. The source: Laevitas.ch
The aforementioned chart demonstrates that when the Ether futures premium passed the 4% cutoff, traders in derivatives are no longer neutral to negative. More significantly, it demonstrates tenacity despite ETH's failure to maintain the $1,700 support on February 21.
The reduced demand for leveraged shorts (bears) does not always indicate that positive price movement is expected. To understand how market makers and whales are estimating the likelihood of future price moves, traders can study the options markets for Ether.
Options Risk Metrics Shift Away From a Pessimistic Outlook
The 25% delta skew is a clear sign that market makers and arbitrage desks are overcharging for upside or downside protection.
When markets are weak, options traders are more likely to see a price decline, which causes the skew indicator to exceed 10%. In good markets, where the skew indicator is frequently lower than -10%, the demand for bearish put options declines.
30-day ether options with a 25% delta skew: the website Laevitas.ch
On February 14, the delta skew nearly reached the negative 10% barrier, indicating tension among experienced traders. Nevertheless, when the index moved closer to zero over the course of the week, signaling a comparable appetite for risk on the upside and downside, things got better.
The probabilities of ETH breaching over the $1,700 resistance are currently greater, according to the options and futures markets, which indicate that professional traders are switching from a bearish to a bullish posture.
As a result, the chances are in favor of Ether bulls since investors maintained their composure in the face of regulatory pressure and unfavorable feelings about the impending Shanghai upgrade.
Disclaimer: FAMEEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.