Ether (ETH<\/a>) investors are having a rough time in 2022, with ETH accumulating 25% losses year-to-date as of March 17. Still, the cryptocurrency has bounced multiple times near $2,500 over the past couple of months, signaling a solid support level.<\/p>\n On March 15, Ethereum developer Tim Beiko announced that the Kiln testnet \u2014 formerly Ethereum 2.0<\/a> \u2014 successfully passed the Ethereum \u201cMerge.\u201d<\/a> The process involves taking Ethereum\u2019s Execution Layer from the existing proof-of-work layer and merging it with the Consensus Layer from the Beacon Chain. The end goal is to turn the blockchain into a proof-of-stake network.<\/p>\n The United States Federal Open Market Committee (FOMC) increased interest rates to 0.50%<\/a> on March 16 \u2014 the first such move since 2018. The monetary authority warned of persisting \u201cupward pressure on inflation,\u201d precisely the problem that cryptocurrencies\u2019 digital scarcity aims to solve.<\/p>\n Investors fear that further rate hikes by the FOMC could have negative consequences on risk markets. For example, a higher cost of borrowing reduces economic stimulus, creating a hurdle for businesses\u2019 expansion and consumer spending. <\/p>\n Regardless of its potential, Ether\u2019s 80% historical volatility shifts most investors\u2019 perception to see it as a risky asset that will inevitably succumb to an eventual broader market correction.<\/p>\n To understand how professional traders are positioned, one should look at Ether\u2019s futures and options market data. Firstly, the basis indicator measures the difference between longer-term futures contracts and the current spot market levels.<\/p>\n The annualized premium of Ether futures should run between 5% and 12% to compensate traders for \u201clocking in\u201d the money for two to three months until the contract expires. Levels below 5% are extremely bearish, while numbers above 12% indicate bullishness.<\/p>\n The above chart shows that Ether\u2019s basis indicator recovered from 2% on March 13 to the current 3.5%. However, such a level falls below the 5% threshold expected on neutral markets, signaling that pro traders are far from comfortable holding ETH futures longs.<\/p>\n Thus, one can assess that an eventual break of the $3,200 resistance will catch those investors off guard, creating\u00a0 strong buying activity to cover short positions.<\/p>\n Ether\u2019s daily closing price has been ranging from $2,500 to $3,000 for the past 27 days, making it difficult to discern a direction in the market. In that sense, the 25% delta skew is extremely useful, as it shows whether arbitrage desks and market makers are overcharging for upside or downside protection.<\/p>\n If those traders fear an Ether price crash, the skew indicator will move above 10%. On the other hand, generalized excitement reflects a negative 10% skew. That is precisely why the metric is known as the pro traders\u2019 \u201cfear and greed\u201d metric.<\/p>\n Related: <\/strong>How professional Ethereum traders place bullish ETH price bets while limiting losses<\/em><\/strong><\/a><\/p>\n As shown above, the skew indicator has been over 10% since March 11, indicating fear, as these options traders are overcharging for downside protection.<\/p>\n Even though there was a modest improvement on Ether\u2019s futures premium, the indicator remains on a bearish level. Considering the ETH options markets pricing a higher risk of downside, it is safe to conclude that professional traders are not confident that the current $2,500 support will hold.<\/p>\n However, not everything is lost for Ether bulls, as the cheap futures premium offers the opportunity to leverage long at a low cost. As long as the Ethereum network continues to advance on solving its scalability problem, it is still possible that the $3,200 resistance gets revisited considering the global macroeconomic uncertainty and inflation.<\/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\/d41d8f9d-637c-488b-82bc-d4bbcfc2ca6d.png\")
Ether futures show modest sentiment improvement<\/h2>\n
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Options traders fear ETH could drop lower<\/h2>\n
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