Derivatives data shows that Ether (Ethereum) Compared with Bitcoin, traders feel less optimistic (Bitcoin). Although altcoins have gained nearly 200% in the first half of 2021 compared to the modest 22% increase in the price of Bitcoin, traders seem to be more susceptible to the recent underperformance of Ether.
Institutional flows also support the decline in optimism for ether derivatives because ETH investment tools have suffered record capital outflows in the past week And Bitcoin traffic started to stabilize.according to Data from CoinSharesLast week, Ether funds flowed out a record 50 million U.S. dollars.
Please note how Ethereum performed 16% below Bitcoin in June.This London hard fork It is scheduled to proceed in July, and its core proposal (called EIP-1559) will limit the gas cost of Ethereum. Therefore, as the network migrates from Proof of Work (PoW), price movements may be related to unsatisfied miners.
For this reason, Ethereum investors have reason to worry, because uncertainty abounds. Perhaps the miners supporting competitive smart contract chains or some other unexpected events may further negatively affect the price of Ether.
Regardless of the reason for the current price movement, derivatives indicators now indicate a lack of confidence compared to Bitcoin.
Ethereum December futures premium shows weakness
In a healthy market, quarterly futures trading prices should be higher than regular spot exchanges. In addition to exchange risk, the seller “locks in” funds by delaying settlement. The 4% to 8% premium of the December contract should be enough to make up for these effects.
Similar effects occur in almost every derivatives market, although cryptocurrencies tend to have higher risks and higher premiums. However, when futures prices fall below this range, it indicates that there is short-term bearish sentiment.
The above chart shows that the Bitcoin December futures premium rebounded to 3.5%, while the Ethereum contract failed to follow up. Although both assets show neutral to bearish indicators, there is evidence that altcoin investors are less optimistic about the short-term recovery.
The other leg will do more damage to altcoins
Another argument that may have a negative impact on the Ether premium is the potential 30% negative performance impact of Bitcoin. According to Filbfilb, an independent market analyst and co-founder of Decentrader trading suite, A 30% plunge in Bitcoin may cause altcoins to fall twice.
Clem Chambers, chief executive of financial analysis website ADVFN, also predicted another possible fall, which will repeat the crypto winter period of late 2018. Chambers claimed that Bitcoin may succumb and fall back to $20,000.
Although the overall market sentiment is neutral to bearish, it seems wise to predict more daunting situations for ETH, including the uncertainty of the transition to Proof of Stake (POS).
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