Ethereum (ETH<\/a>) price is struggling to overcome resistance at $1,600 and this is the altcoin\u2019s third attempt since September 2022. Some would say the 33% year-to-date rally could be interpreted as a failed opportunity to breach the $200 billion market capitalization mark.\u00a0<\/p>\n If Ethereum price were to break above $1,600, it would return Ether to a top-60 global tradable asset, surpassing giant multinational companies like Nike (NKE), Novartis (NVS), Cisco (CSCO) and Toyota (TM). <\/p>\n Unfortunately, at least for bullish traders, derivatives markets are not hinting that Ether will finally break the $1,600 resistance \u2014 at least, not until the U.S. Federal Reserve reverses its course of tightening the economy.<\/p>\n Bulls’ frustrations can partially be explained by Silvergate Bank’s $1 billion net loss<\/a> in the latest quarter. The crypto-friendly bank laid off roughly 40% of its workforce on Jan. 5 and it now faces a class-action lawsuit over its FTX and Alameda Research dealings. The suit alleges that Silvergate aided and abetted FTX’s fraudulent activities and the exchanges’ breaches of fiduciary duty.<\/p>\n The negative newsflow continued on Jan. 17, as Japan’s deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, argued that the crypto sector should face the same regulation<\/a> as traditional banks and brokerages.<\/p>\n The fact that Ether continues to trade above $1,500 is a positive, but the most recent price pump closely followed an 8% gain by the Russell 2000 index. In addition, investors fear that data showing a reduction in inflation was the main driver behind the cryptocurrency market recovery, so any retreat in the stock market could trigger another wave of selling. <\/p>\n Consequently, investors believe that Ether could retrace its recent gains if the U.S. Federal Reserve keeps raising interest rates. Let’s look at Ether derivatives<\/a> data to understand if the surprise pump positively impacted investors’ sentiment.<\/p>\n Retail traders usually avoid quarterly futures due to their price difference from spot markets. Meanwhile, professional traders prefer these instruments because they prevent the fluctuation of funding rates in a perpetual futures contract<\/a>.<\/p>\n The two-month futures annualized premium should trade between +4% to +8% in healthy markets to cover costs and associated risks. However, when the futures trade at a discount versus regular spot markets, it shows a lack of confidence from leverage buyers, which is a bearish indicator.<\/p>\n The chart above shows that derivatives traders remain in “fear mode” because the Ether futures premium is below the 4% threshold. This data indicates the absence of leverage buyers’ demand, although it does not signal that traders expect further adverse price action.<\/p>\n For this reason, traders should analyze Ether’s options markets<\/a> to understand whether investors are pricing higher odds of surprise adverse price movements.<\/p>\n The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.<\/p>\n In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 10%. On the other hand, bullish markets tend to drive the skew indicator below -10%, meaning the bearish put options are discounted.<\/p>\n The delta skew improved considerably since Jan. 14, declining from a neutral-to-bearish positive 10% to a neutral options pricing. The movement signaled that options traders became more comfortable with downside risks since the 60-day delta skew stands at negative 2%.<\/p>\n![](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-01\/7480e5f6-b268-4148-8835-eda551bbe935.png\")
Ether\u2019s 33% rally was not enough to instill confidence<\/h2>\n
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Options markets are neutral, adding strength to the $1.6K resistance<\/h2>\n
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