Ether (ETH<\/a>) is still in troubled waters after failing to break a five-week-long descending channel top for the third time in a row. The March 2 test of the $3,000 resistance was followed by a 17.5% correction in five days, which signals that buyers are somewhat reluctant to defend the price.<\/p>\n To date, Ether suffers from high network transaction fees, even though it dropped from $19 in mid-February to the current $13 per transaction. While this is less than peaks seen previously, $13 per transaction is still incompatible with most games, nonfungible token and even decentralized finance transactions.<\/p>\n Even more worrisome than Ether’s performance has been the total value locked (TVL) in Ethereum declining by 55% on March 8. Data shows the percentage of assets locked in its smart contracts<\/a> reached an all-time low versus competitors.<\/p>\n This indicator could partially explain why Ether has been in a down-trend since early February. But, more importantly, one needs to analyze how professional traders are positioning themselves and there’s no better gauge than derivatives markets.<\/p>\n To understand whether the current bearish trend reflects top traders’ sentiment, one should analyze Ether\u2019s futures contracts premium, which is also known as a “basis.” Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.<\/p>\n By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Conversely, bearish sentiment tends to cause the three-month futures contract to trade at a 5% or lower annualized premium (basis).<\/p>\n On the other hand, a neutral market should present a 5% to 15% basis, reflecting market participants’ unwillingness to lock in Ether for cheap until the trade settles.<\/p>\n The above chart shows that Ether\u2018s futures premium has bottomed on Feb. 28 near 1.5%, a level typically associated with moderate pessimism. Despite the slight improvement to the current 3% basis, futures market participants are reluctant to open leverage long (buy) positions.<\/p>\n The top traders’ long-to-short net ratio excludes externalities that might have impacted the longer-term futures instruments. By analyzing these top clients’ positions on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.<\/p>\n There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.<\/p>\n Curiously, when Ether’s futures premium bottomed at 1.5% on Feb. 28, ETH’s price was remarkably close to the current $2,600. Thus, it makes sense to compare the top traders’ long-to-short ratio over this period.<\/p>\n Binance shows the same level of top traders Ether positions at 0.92 on Feb. 8 and March 8. However, these whales and market markers at Huobi and OKX effectively reduced their longs. For instance, the long-to-short ratio at Huobi declined from 1.07 to the current 1.00. Furthermore, OKX traders’ current 1.47 ratio is smaller than 1.58 from eight days ago.<\/p>\n From the perspective of the metrics discussed above, there is hardly any sense that Ether price will flip bullish in the short-term. The data suggests that pro traders are unwilling to add long positions, as expressed by the basis rate and long-to-short ratio.<\/p>\n Moreover, the TVL data does not back a strong usage indicator of Ethereum smart contracts. Losing ground to competitors, while constantly delaying the migration to a proof-of-stake solution is likely pulling investors\u2019 attention away and making long investors feel uncomfortable.<\/p>\n The views and opinions expressed here are solely those of the <\/em>author<\/em><\/a> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<\/div>\n![](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-03\/6871ddf7-f57e-4d8c-92fa-07ab965f2801.png\")
The futures premium has flatlined<\/h2>\n
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Long-to-short data confirms the lack of excitement<\/h2>\n
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All the data points to further downside<\/h2>\n