Ether (ETH), down 25% in a month, and even the upgrade to a Proof-of-Stake (PoS), consensus on the Ropsten testnet did not move the altcoin’s prices.
Although the merger is intended to solve energy-use problems and open a path towards higher transaction output, the actual transition for Ethereum is not expected until later this year. Parithosh Jayanthi, an Ethereum developer, also pointed out that there were some issues with the PoS implementation. These should be addressed in the coming weeks.
Two of Ethereum’s top competitors faced similar challenges recently. After no new blocks were made for four hours in June, the Solana (SOL), network experienced its fifth outage in 2022. Every decentralized application was stopped until validators could resolve the issue and resynchronize the network.
Binance’s native BNB token dropped 7% after the US Securities and Exchange Commission announced it was opening an investigation into the initial coin offering (ICO) that began in 2017. Bloomberg reports that at least one U.S. resident claimed they took part in the ICO. This could prove crucial in an SEC case.
Ether’s sharp correction could partly be due to regulatory uncertainty. The Securities and Futures Commission of Hong Kong (SFC), issued a warning note on June 6 regarding the investment risks associated with non-fungible tokens. The agency warned about the opaque pricing, inliquid markets and fraud of certain sectors.
Option traders remain extremely risk-averse
Ether’s data on derivatives markets should be reviewed by traders to see how large-sized traders are placed. The 25% delta skew indicates that arbitrage desks and whales charge too much for downside or upside protection.
The skew indicator will rise above 10% if traders are worried about an Ether price crash. Generalized excitement, on the other hand, reflects a skew of minus 10%. This is why the metric is also known as the pro traders fear and greed metric.
Ether 30-day options 25% delta-skew: Source: Laevitas.ch
Since May 22, the skew indicator has exceeded 10% and recently reached 20% on June 3. These levels indicate extreme fear among options traders and, despite the slight improvement, the current 17% Delta skew indicates that whales and arbitrage desks are unwilling to accept downside risk.
Some positives can be found in long-to-short data
The long-to-short net ratio of the top traders does not include externalities that could have only impacted the options market. Analyzing the positions of these top clients on spot, perpetual, and quarterly futures contracts will help you to understand if professional traders are bullish or bearish.
Sometimes there are methodological differences between exchanges. Therefore, viewers should pay attention to changes and not absolute numbers.
Top traders in exchanges Ether long-to–short ratio Source: Coinglass
According to the indicator, even though Ether is struggling to maintain $1,800 as support, professional traders didn’t change their positions between June 5-9.
Binance saw a slight decrease in its long/short ratio. The indicator moved from 0.99 in four days to 0.96 now. These traders net increased their bearish bets slightly.
Huobi data showed a similar pattern. The indicator changed from 1.02 to 0.98 June 9, which was a slight change favoring shorts. OKX exchange saw the metric fluctuate dramatically over the course of the period, but it ended almost unchanged at 1.35.
Related: DeFi contagion? Analysis: De-pegging Ethereum with ‘Staked Ether,’ warns 50%
Mixed derivatives data provides hope for bulls
Despite Ether’s failure on June 6 to break the $1900 resistance, there has been no significant shift in market makers and whales’ leverage positions.
Options traders are concerned about a deeper Ether price correction, while futures market players don’t believe in increasing bearish bets.
This reading is most likely a “glass-half-full” scenario, as top traders’ reluctance to sell below $1,900 could create support levels.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.