Ethereum price moves towards $3K, but professional traders choose not to add leverage

While the price of Ether (ETH) rose more than 20% from its $2,300 low on Feb. 22, derivatives data shows investors are still cautious. To date, the price of Ether is down 24% this year and significant overhead resistances lie ahead.

Ethereum’s most pressing problem is high network transaction costs and investors are increasingly concerned that this will remain an issue even after the network integrates its long-awaited upgrades.

For example, the average transaction cost for the 7-day network is still above $18, while the network value locked in smart contracts (TVL) fell 25% between January 1 and February 27 to $111 billion. This negative indicator could partly explain why Ether has been in a downtrend since early February.

Ether/USD price at FTX. Source: TradingView

The above channel is currently showing resistance near $3,100 while the daily closing price support is at $2,500. Therefore, a 14% rally from the current level of USD 2,750 must occur to cancel the prevailing downtrend.

Derivatives markets show fear as the prevailing sentiment

The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator turns positive when “fear” prevails, because the protective premium for put options is higher than the call options.

The opposite is true when market makers are bullish, shifting the 25% delta skew into negative territory. Readings between 8% negative and 8% positive are generally considered neutral.

Deribit Ether 30-day options 25% delta skew. Source:

The chart above shows that Ether options traders have been bearish since February 11, just as Ether failed to break the $3,200 resistance. In addition, the current 8.5% reading shows no confidence from market markers and whales, despite the 7.5% price increase on Feb. 28.

Exchange-provided data emphasizes traders’ long-to-short net positioning. By analyzing each client’s position on the spot, perpetual contracts and forwards, one can better understand whether professional traders are bullish or bearish.

There are occasional methodological differences between different exchanges, so viewers should keep an eye out for changes rather than absolute numbers.

The best traders of exchanges Ether long-to-short ratio. Source: Coinglass

Even with Ether’s 21.5% rally since February 24, top traders on Binance, Huobi and OKX have cut their leverage longs. More precisely, Huobi was the only exchange to experience a modest cut in the long-to-short ratio of the top traders as the indicator moved from 1.04 to 1.07.

However, this impact was more than offset as OKX traders increased their bullish bets from 2.15 to 1.58 from February 24 to February 28. On average, top traders have cut their long positions by 8% over the past four days.

Top traders can be surprised

From the perspective of the stats discussed above, there is hardly any sense of bullishness in the Ether market. In addition, data suggests that professional traders are unwilling to add in long positions, as expressed by both futures and options markets.

Of course, even professional traders are wrong, and a short cover should occur if Ether breaks the current resistance of the $3,100 downtrend channel. Still, it is also important to at least recognize that at current levels there is little interest in buying using derivatives.

The views and opinions expressed here are solely those of the writer and do not necessarily reflect the views of Coin-Crypto. Every investment and trading move involves risks. You should do your own research when making a decision.

Leave a Comment