Ether (Ethereum) The price lags behind Bitcoin’s (Bitcoin) The price movement in October was 13%, but is this relevant? So far, the performance of altcoins in 2021 is still 274% higher than that of BTC. However, traders are often short-sighted, and some people will question whether the Ethereum network can successfully migrate to Proof of Stake (PoS) verification and ultimately solve the problem of high gas fees.
In addition, increasing competition from smart contract networks such as Solana (SOL) and Avalanche (AVAX) has been worrying investors:
A big problem with the “ETH is a super currency” meme is that if Ethereum continues to conduct a large number of transactions, EIP-1559 will only limit the supply of ETH. People may get tired of the $80 petrol fee and choose one of many alternatives (SOL, AVAX, etc.).
-Dennis in SF // OP_CTV (@pourteaux) October 8, 2021
according to telegraphRecently, speculation about the possible approval of Bitcoin exchange-traded funds (ETF) has increased traders’ interest in BTC. The US Securities and Exchange Commission (SEC) is expected to announce its decision on multiple ETF applications in the coming weeks. However, regulators may still postpone these dates.
Professional traders are dismissive of recent price stagnation
To determine whether professional traders tend to be bearish, you should start by analyzing futures premiums (also known as basis spreads). This indicator measures the price gap between the futures contract price and the regular spot market.
Ether’s quarterly futures are the tool of choice for whales and arbitrage platforms. Due to settlement dates and price differences from the spot market, these derivatives may seem complicated to retail traders, but their most significant advantage is the lack of fluctuating financing rates.
Three-month futures are usually traded at an annualized premium of 5% to 15% based on the stable currency loan interest rate. By delaying settlement, sellers demand higher prices, which leads to price differences.
As mentioned above, the failure of Ether to break through the resistance of $3,600 did not lead to a shift in the mood of professional traders, as the basis remained at a healthy 13%. This shows that there is currently no overly optimistic.
Retail traders have remained neutral for the past five weeks
Retail traders tend to choose perpetual contracts (reverse swaps), which charge a fee every eight hours to balance the need for leverage. To understand whether a panic selling has occurred, it is necessary to analyze the financing rate of the futures market.
In a neutral market, the funding rate often ranges from 0% to 0.03% on the positive side. This fee is equivalent to 0.6% per week, indicating that the bulls are the ones who pay the fees.
Since September 7th, there has been no indication that long or short demand for leverage is high. This balanced situation reflects the lack of interest among retail investors in leveraged long positions, but at the same time they have not shown panic selling or excessive fear.
The derivatives market shows that Ethereum investors are not worried about the recent underperformance compared to Bitcoin. In addition, it should actively describe the lack of excessive long leverage after the year-to-date rise of 274%.
By leaving some room for bullishness without compromising the structure of the derivatives market, Ether traders appear to be ready for a rebound above all-time highs, especially if the Bitcoin ETF is approved.
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