{"id":44648,"date":"2023-02-22T02:42:34","date_gmt":"2023-02-22T02:42:34","guid":{"rendered":"http:\/\/egrowonline.com\/?p=44648"},"modified":"2023-02-22T02:42:34","modified_gmt":"2023-02-22T02:42:34","slug":"ethereum-derivatives-data-suggests-1700-might-not-remain-a-resistance-level-for-long","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=44648","title":{"rendered":"Ethereum derivatives data suggests $1,700 might not remain a resistance level for long"},"content":{"rendered":"


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The price of Ether (ETH<\/a>) rallied 18% between Feb. 13 and Feb. 16 but has since been range trading near the $1,700 level. Despite the recent price improvement, Ether derivatives metrics remain neutral-to-bullish ponder the investors the tighter regulatory environment and the potential impact of Ethereum\u2019s\u00a0Shanghai upgrade.<\/p>\n

Investors’ biggest concern right now is regulation, especially after the United Kingdom\u2019s Financial Stability Board (FSB) recently stated that most stablecoins fail to meet international standards<\/a>. The entity was created by the G20 and is affiliated with the Bank of International Settlements (BIS). FSB chair Klaas Knot stated that the appropriate regulation of crypto-assets should be “based on the principle of same activity, same risk, same regulation.”<\/p>\n

In more positive news, there has been some improvement in China after the government is reportedly taking a softer approach to Hong Kong\u2019s crypto hub<\/a> aspirations. According to a Feb. 20 Bloomberg report, representatives from China have been frequenting Hong Kong crypto gatherings seeking to understand local crypto business operations.<\/p>\n

A recent Binance report detailed the status of Ether staking and explored why the Shanghai upgrade may not result in the ETH sell pressure<\/a> that some traders have predicted. Their rationale is based on liquid staking derivatives, which allow users to benefit from staked Ether while retaining the ability to sell the derivative token.<\/p>\n

Let’s look at Ether derivatives<\/a> data to understand if the $1,700 price rejection has impacted crypto investors’ sentiment.<\/p>\n

ETH futures show higher demand for leverage longs<\/h2>\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 contract trades at a discount versus regular spot markets, it shows a lack of confidence from traders and isa bearish indicator.<\/p>\n

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Ether 2-month futures annualized premium. Source: Laevitas.ch<\/figcaption><\/figure>\n

The chart above shows that derivatives traders are no longer neutral-to-bearish after the Ether futures premium exceeded the 4% threshold. More importantly, it shows resilience even as ETH failed to sustain the $1,700 support on Feb. 21.<\/p>\n

The lessened demand for leverage shorts (bears) does not necessarily translate to an expectation of positive price action. 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

Options risk metrics move away from bearish sentiment<\/h2>\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 metric below -10%, meaning the bearish put options are in less demand.<\/p>\n

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Ether 30-day options 25% delta skew: Source: Laevitas.ch<\/figcaption><\/figure>\n

The delta skew flirted with the bearish 10% level on Feb. 14, signaling stress from professional traders. However, the situation improved through the week as the index moved close to 0 \u2014 indicating similar upside and downside risk appetite.<\/p>\n

Currently, options and futures markets point to pro traders moving to a neutral-to-bullish sentiment, displaying higher odds of ETH breaking above the $1,700 resistance. Consequently, the odds favor Ether bulls as investors remained calm despite the regulatory pressure and negative emotions associated with the upcoming Shanghai upgrade.<\/p>\n

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.\n<\/p>\n

The views, thoughts and opinions expressed here are the authors\u2019 alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.\n<\/p>\n<\/div>\n


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The price of Ether (ETH) rallied 18% between Feb. 13 and Feb. 16 but has since been range trading near the $1,700 level. Despite the recent price improvement, Ether derivatives metrics remain neutral-to-bullish ponder the investors the tighter regulatory environment and the potential impact of Ethereum\u2019s\u00a0Shanghai upgrade. Investors’ biggest concern right now is regulation, especially […]<\/p>\n","protected":false},"author":1,"featured_media":44649,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[41],"tags":[21,204,158,664,414,256,3959,2966],"class_list":["post-44648","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ethereum","tag-data","tag-derivatives","tag-ethereum","tag-level","tag-long","tag-remain","tag-resistance","tag-suggests"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2023\/02\/57afd1b3-d3a3-458f-97f3-796bdf0a0e87.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/44648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=44648"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/44648\/revisions"}],"predecessor-version":[{"id":44650,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/44648\/revisions\/44650"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/44649"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44648"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}