Originally published on: December 09, 2024
The recent decline of Ether on Dec. 9, testing the $3,800 level, has left traders wondering about the future of the bull run. Despite failing to break above $4,050, a resistance level in place since December 2021, the 5% drop has sparked concerns among investors, especially as Bitcoin hovers near $100,000.
However, professional traders in the Ether futures market seem unfazed by the price drop, with the annualized premium for Ether futures holding steady at 17%. This elevated premium suggests a strong demand for ETH leverage, potentially driven by arbitrage opportunities in perpetual contracts.
With retail traders typically avoiding monthly futures, the increased demand for leveraged positions in monthly ETH contracts is being closely monitored by whales and market makers. The funding rate for Ether perpetual futures reflects this demand, currently standing slightly above the neutral threshold at 2.7%.
Despite the recent price correction, onchain activity on the Ethereum network has surged, alleviating concerns over transaction fees. Additionally, Ethereum’s dominance in decentralized application (DApp) volumes is evident, with the network significantly narrowing the gap with Solana.
To gauge whether professional ETH investors foresee further corrections, the Ether options skew must be analyzed. While the options market has shown diminished optimism, with the skew moving to -2%, the market has displayed resilience despite the recent price correction.
Overall, the decline in Ether’s price appears to be influenced more by macroeconomic factors rather than crypto-specific issues. Investor confidence may have been impacted by external events, but traders remain optimistic, as indicated by the derivatives market indicators.
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