Ethereum Falls To $3.8K, But Are ETH Traders Turning Bearish?
Ether (ETH) declined on December 9, failing to break above $4,050 and retesting the $3,800 level – a resistance level that has been in place since December 2021. A 5% drop in price could see the sustainability of a bull run among traders, especially as Bitcoin (BTC) nears $100,000.
Investor uncertainty was partly due to massive inflows into ether exchange-traded funds (ETFs), which failed to translate into a breach of multi-year resistance levels. Despite this, Ether futures data suggests that professional traders remain indifferent, showing no signs of expecting further corrections.
Ether's 2-month future annual premium. Source: Laevitas.ch
The annualized premium for Ether futures currently stands at 17%, unchanged from last week and significantly higher than the 10% neutral benchmark. This higher premium may indicate increased demand for ETH leverage, driven by arbitrage opportunities with perpetual contracts, also known as reverse swaps.
Retail traders typically avoid monthly futures due to their price divergence from spot ETH markets due to their long settlement cycle. Therefore, higher interest rates—reflected in funding rates for perpetual contracts—could affect monthly futures prices as whales and market makers closely monitor arbitrage opportunities.
Ether Perpetual Futures 8-Hour Funding Rate. Source: laevitas.ch
Ether's perpetual futures funding rate currently reflects a 2.7% monthly premium, slightly above the neutral threshold of 2.1%. In particular, this measure reached 5.4% on December 5, which may contribute to the appetite for improved positions in monthly ETH contracts.
ETF earnings and Ethereum activity boost demand for bullish derivatives
Other factors driving demand for the unprecedented $1.17 billion Ether ETF flow since November 29 is that onchain activity on the Ethereum network has increased by 24% compared to last week, reducing the risk of the current $7.50. Average transaction fee.
Blockchains are rated by 7-day DApps volumes, USD. Source: Defillama
The Solana network maintained its position as the leader in decentralized application (DApp) volumes, but Ethereum narrowed the gap significantly, reaching $24.2 billion in seven days. When you include Ethereum's layer-2 scaling solutions such as Base, Arbitrum, Polygon, and Optimum, the combined amount rises to $48.6 billion—65% more than Solana's $29.5 billion.
To assess whether professional ETH investors anticipate further price corrections, the skew of ETH options should also be analyzed. In the underlying markets, traders often demand higher premiums for put (sell) options, which causes the 25% delta skew to increase to more than 6%.
Deribit Ether 1 Month Options 25% Delta Skew, Call. Source: Laevitas.ch
The optimism of the Ether options market has decreased, the swing to -2% (neutral) from -7% on December 6. However, despite ETH's 5% price correction and repeated breach of $4,050, the options market has shown resilience. . A reversal to bearish sentiment would have pushed the spike above the 6% neutral threshold.
RELATED: Crypto ETPs Record $3.85B Revenue As Bitcoin Breaks $100K
Ether's price decline appears to have been more influenced by macroeconomic factors than crypto-specific factors. Investor confidence may have been shaken after NVDA shares fell after the antitrust probe was announced, with China's inflation data showing a 0.6 percent drop in November from the previous month.
Fears of weakening global economies, which could impact cryptocurrency markets, played a role in the recent ETH price correction. However, traders' sentiment remained optimistic as reflected in the primary market indicators.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
