Ethereum Price Nears $3,000, But Professional Traders Choose Not to Leverage

While ethereum’s price has rallied more than 20% from its Feb. 22 low of $2,300, derivatives data shows investors remain cautious. With ethereum's price down 24% so far this year, key overhead resistance lies ahead.

Ethereum's most pressing problem is high network transaction fees, and investors are growing concerned that this will remain a problem even after the network incorporates long-awaited upgrades.

For example, the 7-day average network transaction fee remains above $18, while the network value locked in smart contracts fell 25% between Jan. 1 and Feb. 27 to $111 billion. This negative indicator could partly explain why Ethereum has been trending lower since early February.

FTX’s ETH/USD price source: TradingView

The aforementioned channel is currently showing resistance at $3,100, while daily close support is at $2,500. Therefore, a 14% bounce from the current level of $2,750 would be needed to cancel the current downtrend.

Derivatives markets show fear reigns supreme

The 25% delta skew compares equal call (buy) and put (sell) options. When "fear" prevails, the indicator turns positive, as protective puts command a higher premium than calls.

The opposite was true when market makers were bullish, causing the 25% delta skew to move into negative territory. Readings between minus 8% and plus 8% are generally considered neutral.

Deribit Ethereum 30-day option 25% delta skew Source: laevitas.ch

The above chart shows that ETH options traders have been sending bearish signals since February 11 when ETH failed to break above the $3,200 resistance level. Moreover, the current reading of 8.5% suggests that market makers and whales are not confident despite the 7.5% price increase on February 28.

Data provided by the exchanges highlights traders' net long-short positions. By analyzing each client's spot, perpetual and futures contract positions, we can better understand whether professional traders tend to be bullish or bearish.

There are occasional methodological differences between different exchanges, so observers should monitor changes rather than absolute numbers.

Ethereum Long/Short Ratio by Top Traders on Exchanges Source: Coinglass

Top traders on Binance, Huobi, and OKX have reduced their leveraged long positions even as Ethereum is up 21.5% since Feb. 24. More precisely, Huobi was the only exchange that faced a small drop in the long-short ratio of top traders.

However, this was offset by OKX traders increasing their bullish bets from 2.15 to 1.58 between Feb. 24 and Feb. 28. Over the past 4 days, top traders have reduced their long positions by an average of 8%.

Top traders can be caught off guard

From the perspective of the indicators discussed above, there is little bullish feeling in the Ethereum market. In addition, the data showed that professional traders were reluctant to add to their long positions, judging by the performance of the futures and options markets.

Of course, even professional traders can be wrong, and if Ethereum breaks the current descending channel resistance at $3,100, there should be short covering. Still, it's also important to at least recognize that traders have little appetite for buying derivatives at current levels.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.