Investment

Ethereum bulls attract $ 1,750 in support and lack of ETH disposal


As the price of bitcoin fell below $ 55,000 on 15 March, Ether (ETH) withdrew and confirmed the $ 1750 level as support. This signals the optimism of professional traders, despite the 12% drop that occurred after the price of Ether reached a peak of $ 1,950 on March 13.

While Ether may be bullish in terms of bullish prices, recent reports on the protocol have not been positive. Last week, Cointelegraph reported growing tensions between miners and developers when they clashed over an EIP-1559 proposal that should reduce fee volatility and significantly affect miners’ incomes.

Plus high Etherea network charges caused a decline in volumes on the decentralized exchange (DEX), while providing support to competitors such as Binance Smart Chain (BSC).

Price of ether, USD. Source: TradingView

Despite repeated testing of levels below $ 1,750 in the last week, Ether has shown strength. The upcoming update in Berlin on April 14 is expected to drastically reduce network congestion, giving investors the confidence they need during the recent turbulence.

It is worth noting that despite the recent fall in prices, the liquidation of futures contracts has remained relatively low. This is in stark contrast to February 21 and February 22, when $ 1.4 billion positions were severely closed, accelerating Ether’s downward trend.

Ether futures contracts aggregate liquidations. Source: Bybt

Considering how the aggregate liquidations of long-term contracts on March 15 and 16 remained below $ 270 million, it shows that buyers do not have high leverage. This leaves room for more bullish bets and also removes incentives for bears trying to suppress the prize.

The futures premium has returned to normal

Basis is also often referred to as the futures premium and measures the premium on longer-term futures contracts to the current level of the spot market.

12% to 24% of the annualized premium (base) is interpreted as neutral, a situation known as contango. This price difference is caused by sellers who demand more money to delay settlement longer.

Whenever this indicator fades or turns negative, it creates an alarming red flag. This situation is called lagging behind and indicates that the market is deteriorating rapidly.

OKEx 3-month futures base ETH. Source: Skew

The chart above shows that the indicator recently peaked at 35% on March 14, when Ether maintained a resistance of $ 1,800. Since then, it has returned to a neutral to bullish level of 23%.

Considering the 12% decline since the $ 1,950 peak on March 13, the futures premium remains a healthy bull indicator and signals strength.

The chamfering of possibilities is on the verge of a bullish rise

To confirm the upward trend, investors should look at Ether’s markets. Call options allow the buyer to obtain Ether at a fixed price after the contract is terminated. On the other hand, option sales provide insurance for buyers and protect against falling prices.

Whenever market makers and professional traders lean upwards, they will demand higher call (purchase) bonuses. This trend is caused by a negative 25% delta skew indicator.

BTC options 25% delta skew. Source: laevitas.ch

There has been no positive delta difference in the last month. Thus, there is no evidence that option traders demand more significant decline protection bonuses.

These data are very encouraging, given that Ether has failed to create a new historical high and is still facing enormous negative pressure from miners who are opposed to reducing the block’s subsidy.

If support continues to hold $ 1,750, investors are likely to gain further confidence that the uptrend has not been breached.

The views and opinions expressed herein are those of an opinion author and does not necessarily reflect the views of the Cointelegraph. Every investment and business move involves risk. You should do your own research when making your decision.



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