The price of Ether (ETH<\/a>) rallied 16% between Jan. 14 and Jan. 21, peaking at $1,680 before facing a 5.4% rejection. Curiously, the same resistance level resulted in a substantial correction in late August 2022 and again in early November 2022.\u00a0<\/p>\n From one side, traders are relieved that Ether is trading up 35.5% year-to-date, but the repeated corrections that follow retests of the $1,680 resistance may have weakened investors’ sentiment.<\/p>\n Negative newsflow might have limited Ether investors’ appetite after troubled cryptocurrency company Digital Currency Group (DCG) faced more legal issues<\/a> this week. On Jan. 23, a group of Genesis Capital creditors filed a lawsuit alleging violations of federal securities laws. In addition, the plaintiffs allege the lending firm made false and misleading statements through a scheme to defraud potential and existing digital asset lenders.<\/p>\n Another new concerns for Ether holders came on Jan. 22 after, a “temperature check” proposal to deploy the Uniswap v3 protocol to BNB Chain<\/a> received overwhelming support from the Uniswap community. 80% of Uniswap’s UNI governance token holders have voted to deploy the additional version of the decentralized exchange protocol.<\/p>\n On the bright side, Ethereum developers have created a testing environment for the upcoming Shanghai network upgrade. According to Ethereum developer Marius Van Der Wijden, the testnet appears to have been created to evaluate staking withdrawals<\/a>, which are currently disabled on the mainnet. Over 14.5 million ETH (worth $23 billion) has been deposited into the Ethereum staking contract, and harsh criticism followed the multiple delays in enabling withdrawals.<\/p>\n Let’s look at Ether derivatives<\/a> data to understand if the $1,680 price rejection has impacted crypto 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 three-month futures annualized premium should trade between 4% to 8% in healthy markets to cover costs and associated risks. When the futures trade at a discount versus regular spot markets, it shows a lack of confidence from leverage buyers and this is a bearish indicator.<\/p>\n The above chart shows that derivatives traders are no longer bearish because the Ether futures premium reached the 4% threshold for neutral markets. So, bulls can celebrate that the indicator shifted to a modest premium, but that does not mean traders expect the immediate result of positive price action.<\/p>\n For this reason, traders should analyze Ether’s options markets<\/a> to understand how whales and market makers are pricing the odds of future 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![](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-01\/3467d31f-17c9-4fc9-b8e8-75c3c89ce2fd.png\")
ETH futures finally enter the neutral area<\/h2>\n
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Options traders are comfortable with downside risk<\/h2>\n
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