Ethereum Price Floor Potentially Reached, Yet Professional Traders Remain Hesitant to Invest
The price of Ether (ETH), currently at $1,818, has seen a 6.4% recovery from its low of $1,768 on March 30th, its ascent back to the $2,000 mark has proven challenging.
Some market observers suggest this recent slump may be linked in part to the cooling fervor surrounding meme coins.
While not exclusive to the Ethereum blockchain, the meme coin trend’s decline has notably impacted activity within the broader decentralized application (DApp) ecosystem and the wider cryptocurrency sphere.
Having depreciated by 44% since the start of the year, Ether’s derivative market signals reveal a prevailing lack of optimism among traders.
These professionals seem unconvinced about the prospects of a swift price rebound shortly.
This hesitancy is illustrated by the premium observed in Ether futures contracts when compared to spot market prices.
Despite experiencing an increase to 4% on April 2nd from 2% on March 31st, this futures premium remains below the 5% threshold typically considered neutral.
This data indicates that, even with price support seemingly solidifying around the $1,800 level, Ether investors generally remain cautious and have not yet adopted a bullish stance.
To gain insight into the confidence levels of large-volume traders, often known as “whales,” and market makers regarding Ether’s future performance, analyzing the ETH options market is essential.
In a balanced market, the 25% delta skew, a measure reflecting the relative demand for out-of-the-money call and put options, should typically hover between -6% and 6%, indicating equilibrium between buying and selling interest.
The Ether delta skew, while decreasing from the 9% peak observed on March 31st, currently stands at 7%.
This reading continues to suggest a strong sense of risk aversion within the market.
The increasing expense of hedging strategies implies that significant Ether holders anticipate further price declines, suggesting that regaining trader confidence in ETH might be a protracted process.
Neutral ETH Funding Rates Reflect ETF Impact on Retail Trader Enthusiasm
A significant element contributing to this tempered enthusiasm is the performance of spot Ether exchange-traded funds (ETFs), which have experienced net outflows totaling $37 million in the last two weeks.
Although derivative market data often reflects past market behavior and isn’t necessarily predictive of future ETH price drops, market sentiment can be susceptible to rapid shifts.
Also Read: Ethereum’s Downturn Four Straight Months of Price Drops
