Ether (ETH) price declined 27% in three days and continued until it landed at $ 1,040 on January 22.
The sharp correction has liquidated future contracts of $ 600 billion, but interestingly, Ether price continues to trade with a slight downward trend. to an all-time high rose.
The increasing locked total value (TVL) and transaction volumes of the decentralized finance industry are behind Ether’s impressive rise. main factors It was evaluated.
It was noted that a closer look at the on-chain streams and derivative data was needed to determine whether the last leap reflected a potential local peak.
Currency shots indicate whale accumulation
Increased withdrawals from exchanges; It can be caused by many factors such as wagering, earning farming, and buyers sending money to the cold store. A steady stream of net deposits generally indicates willingness to sell in the short term. On the other hand, net retraction is usually whale accumulation it’s about their period.
According to the data revealed by the charts, on January 23, it is seen that central exchanges recently reached their lowest Ether reserve levels since November 2018.
While there is some debate as to whether some of this Ether issue is an internal transfer between Bitfinex cold wallets, last month it was clear. net retraction tendency is happening. Despite these “rumors,” the data point to backlog.
These data also coincide with DeFi’s all-time high locked-in total value (TVL) of $ 26 billion, indicating that investors have chosen to take advantage of lucrative return opportunities that exist outside of central exchanges.
Futures are overbought
By measuring the expense difference between futures and the regular spot market, a trader can measure the level of the market rise.
3-month futures typically have to trade with an annual premium of 6% to 20% compared to regular spot exchanges. When this indicator is low or negative, it is considered an alarming red flag. This situation “Backwardness” and it shows that the market is declining.
On the other hand, if a sustainable base above 20% is “Excessive leverage” It creates the potential for massive liquidations and eventual market crashes by pointing to the rate.
The premium peaking at 6.5% on January 19 indicates that it equates to an annual rate of 38%. This level is considered to be overbought as traders need an even higher price increase before the expiry to profit from it.
Overbought derivatives levels should be considered a yellow flag, although it is normal for them to be maintained for short periods of time. Traders can momentarily exceed normal leverage rates during the rally and then purchase an underlying asset (Ether) to adjust for risk.
One way or another, the market has adjusted itself during the Ether price drop, and the futures premium is now at a healthy 4.5% level or progressing at 28% annualized condition.
Spot volume is still strong and traders buy the decline
In addition to monitoring futures contracts, profitable traders are also watching the volume in the spot market. Significant price increases are thought to be accompanied by strong trading activity, as low volumes often indicate a lack of confidence.
Over the past week, Ether’s daily volume averaged $ 6.1 billion, while this data remains 240% higher than December, even though it’s far from the all-time high of $ 12.3 billion seen on January 11. Therefore, the activity that supports $ 1,477, the highest level in recent times a positive indicator is considered as.
The data provided by the exchange highlight the clear positioning of investors for long and short terms. By analyzing each customer’s position in perpetual and futures contracts on-site, a clearer view can be obtained as to whether professional traders are in an upward or downward trend.
However, as there are occasional differences in methodologies between different changes, viewers are advised to track changes rather than absolute numbers.
The top investors index on Binance and Huobi seems to have held roughly the same Ether position over the past few days. While Huobi’s average for the last 30 days has a long-short ratio of 0.83, Binance traders have an average of 0.94. The current reading at 0.85 indicates a slight negative emotion.
OKEx appears to have dropped by January 24 and eventually dropped to 1.05, although the top traders’ long-short ratio peaked at 2.0, strongly favoring long-term sales in the early hours of January 22. The strong net selling trend is back today with traders buying at the bottom and the indicator dropping to 1.17 in favor of long term buyers.
The fact that arbitrage divisions and market makers cover a large part of the largest traders metric should not be overlooked. The unusually high futures premium encourages these clients to purchase Ether spot positions while simultaneously creating short positions on futures contracts.
The market structure looks reliable, given Ether’s on-chain data showing whales hoarding and the healthy futures premium premium.
Top traders on OKEx also bought today’s drop, Another indication that the rally should continue is happening.