Ethereum has strong fundamentals, so why are professional traders bearish on ETH?

Ether (Ethereum) Outperforms Bitcoin (Bitcoin) It has risen 32% since May. Although JPMorgan Chase and Goldman Sachs continue to issue bullish reports, derivatives indicators show that both assets have bearish factors.

Since May, the prices of Ethereum and Bitcoin have changed. Source: TradingView

Bitcoin’s transaction price is 41% lower than its historical high of $64,900, a move that boosted “Crypto Fear and Greed Index” The lowest level since March 2020.Although the retail industry is worried about the decline, professionals such as Guggenheim Investments It has applied to the US Securities and Exchange Commission for a new fund that may seek exposure to Bitcoin.

Billionaire investor Stanley Druckenmiller reiterated his bullish stance on Bitcoin When he said:

“I think BTC has won the store of value game because it is a brand, it has been in existence for 13-14 years, and its supply is limited.”

The Ethereum network is gaining momentum

In terms of miner income and transaction network value, Ethereum surpasses Bitcoin, just as from Goldman Sachs reveals global investment banks It is believed that Ether “is very likely to surpass Bitcoin as the main store of value.” The report pointed to the growth of the decentralized financial sector and the irreplaceable token ecosystem built on Ethereum.

Bitcoin and Ethereum network miners’ income, U.S. dollars. Source: CoinMetrics

Note how the income of Ethereum miners significantly surpassed Bitcoin in May, reaching a daily average of $76 million. This figure exceeds Bitcoin’s $45 million in miners’ income, which includes a 6.25 per block subsidy, as well as transaction fees.

A similar situation happened with the amount of transactions and transfers on each network. According to this indicator, Ethereum showed a significant advantage for the first time.

Bitcoin and Ethereum networks average daily transactions in U.S. dollars. Source: CoinMetrics

The above figure shows that the Ethereum network settles an average of 25 billion US dollars per day, which is 85% higher than Bitcoin. Stablecoins certainly played an important role, but the $50 billion net worth locked in decentralized financial applications also played an important role.

Futures premium is slightly bearish

When measuring the premium of futures contracts, both Bitcoin and Ethereum show similar bearish levels. The benchmark interest rate measures the difference between the long-term futures contract and the current spot market level.

One-month futures contracts are usually 10%-20% premium to regular spot exchanges to justify locking up funds rather than cashing them out immediately.

OKEx Bitcoin and Ethereum futures annualized premium (basis).Source: Skew

As mentioned above, since the collapse of Bitcoin and Ethereum on May 19, the futures premium has been below 10%. This indicates a slight bearish, although it is far from a negative indicator, the so-called deficit.

Ethereum’s 25% delta skew indicates “fear”

To assess the optimism of Ether traders, we should look at the 25% delta skew. When the premium of a neutral to put put option is higher than that of a call option of similar risk, the indicator will become positive. This situation is generally considered a “fear” scenario. On the other hand, negative skew means higher upside protection costs and points to bullishness.

25% delta skew for the ether option. Source:

Similar to the futures premium, the 25% delta skew of ether options has been fluctuating in the above 10% range since May 19th. This shows that market makers and whales are unwilling to provide downside protection, indicating “fear.”

Despite staying away from highly unfavorable conditions, both ether derivatives indicators indicate a complete lack of bullish sentiment, even though altcoins are up 270% so far this year.

Faced with these disappointing data, some analysts would think that “the glass is half full” because it leaves room for positive surprises.This Ethereum Improvement Proposal 1559, or EIP-1559It is expected to be launched in July and will create a basic network fee that will fluctuate based on network demand. The update also proposes to destroy transaction fees, thereby introducing deflation into the Ethereum ecosystem. OKEx analyst Rick Delaney said it “may increase the attractiveness of assets among the world’s wealthiest investors.”

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