Ethereum Price Could Tumble Below $1,000 If These Key Price Indicators Turn Bearish

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The price of Ether (ETH) has fallen by 37.5% in the past seven days and recent news has reported that the developers have decided to postpone the network’s migration to Proof-of-Stake (PoS) consensus. This upgrade is expected to end the reliance on Proof of Work (PoW) mining and the Merge scalability solution that has been pursued for the past six years.

Competing smart contracts like BNB, Cardano (ADA) and Solana (SOL) have outperformed Ether by 13%-17% since June 8, even though there has been a market-wide correction in the sector. cryptocurrency. This suggests that Ethereum network issues have also weighed on the price of ETH.

The “difficulty bomb” feature was added to the code in 2016 while plans for the new consensus mechanism (formerly Eth2) were being drawn up. At the height of the so-called “DeFi summer,” average Ethereum transaction costs exceeded $65, which was frustrating for even the most avid users. This is precisely why the merger plays such an important role in the eyes of investors and, therefore, the price of Ether.

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Options traders remain extremely risk averse

Traders should consult Ether derivatives market data to understand how whales and market makers are positioned. The 25% delta skew is a telltale sign whenever professional traders overcharge for upside or downside protection.

If traders were expecting a crash in Ether price, the skewness indicator would jump above 10%. In contrast, generalized excitement reflects a negative bias of 10%. This is precisely why the metric is known as the fear and greed metric of professional traders.

Ether options 30 days 25% delta skew: Source: Laevitas.ch

The bias indicator improved on June 16, at least for a brief moment, as it touched 19%. However, as soon as it became clear that climbing above the $1,200 resistance would take longer than expected, the skewness metric jumped back up to 24%. The higher the index, the less inclined traders are to assess downside risk.

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Long-short data shows traders are not interested in shorts

The net long/short ratio of the best traders excludes externalities which could have affected only the options markets. By analyzing these spot, perpetual and quarterly futures positions, one can better understand whether professional traders are bullish or bearish.

There are sometimes methodological discrepancies between different exchanges, so viewers should monitor changes rather than absolute numbers.

The best traders of Ether exchanges long-short ratio. Source: Coinglass

Even though Ether failed to hold the $1,200 support, professional traders did not change their positions between June 14 and June 16, according to the long to short indicator.

Binance showed a slight increase in its long/short ratio, with the indicator rising from 1.11 to 1.22 in two days. So, these traders slightly increased their bullish bets.

Huobi’s data shows a stable trend, with the long-to-short indicator remaining close to 1.00 all the time. Finally, at the OKX exchange, the metric swung significantly over the period but ended nearly unchanged at 1.04.

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Hope for the best, but prepare for the worst

Overall, there was no significant change in whale and market maker futures positions despite Ether’s drop to $1,012 on June 15. However, options traders fear that a crash below $1000 is still possible, but the negative news flow is strongly influencing the price.

If these whales and market makers had evidence that there could be a deeper price correction, it would have been reflected in the long/short ratio of major traders on the exchange.

As the saying goes, “follow their actions, not their words,” which means traders should be prepared for Ether below $1,000, but not as a base case scenario.

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