While the price of Ether (ETH) surged to $ 2,015, multiple indicators observed in the market gave a sign of over-optimism. While investors are thrilled with the rise of the Ether price approaching 180 percent from the beginning of 2021, multiple data warns traders.
The main factors fueling the current uptrend are the launch of CME ETH futures and the value of the Grayscale Investments ETH trust to reach $ 6.3 billion. Decentralized finance continues in popularity as there is currently $ 21 billion worth of locked Ether in the DeFi industry.
Fear and Ambition Index peaked
Currently, the Crypto Fear and Ambition Index is showing the 93 level, indicating “extreme ambition”. Many traders use this data as a buy signal, but if investors are too ambitious, the market is likely to see a correction.
Unlike the trader using excessive leverage, experienced market makers and whales are suspicious of the Ether price rally. The 36 percent correction after the peak level indicates this.
From February 19 to February 23, a $ 2 billion liquidation was seen with long-term contracts that accounted for 28 percent of the total open positions. Therefore, a significant deterioration in market sentiment can be expected, as noted in the previous Fear and Ambition indicator.
Surprisingly, none of this happened in the Ether derivatives markets, as both the futures contract premium (contango) and options curves continued to rise.
Futures premium at a very healthy level
Quarterly futures typically trade at a premium of 10 percent or more compared to regular spot exchanges. Whenever this indicator decreases or becomes negative, it is an alarming sign of danger.
The chart above reveals that the indicator reached 39 percent on February 20, when Ether reached its all-time high. During its correction, this data remained above 16 percent and the price dropped to $ 1,300. These data show that professional traders still believe in the Ether price potential.
Options market on the rise
When analyzing the options market, the 25% delta slope is the first data to be noticed. This indicator compares call (buy) and put (sell) options side by side.
When the put option premium is higher than the buy options, the slope will be negative. A negative slope indicates an uptrend. If the market makers are in a bearish trend, the opposite is true and the 25% delta slope indicator turns positive.
Over the past month, there has been no major development regarding sustainable positive delta slope. Therefore, options traders do not have any downside expectations.
This data seems encouraging as Ether is facing a strong selling process. However, the futures and options data we mentioned above point to an upward trend despite the decline.
As Ether rebounded after a drop to $ 1,300, investors gained more confidence that the uptrend was not breaking. The expectation is bullish.
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