Ether (ETH) has fallen 38% in three weeks and the current $ 2,000 point is 59% below the $ 4,870 all-time high reached in November 2021. Additional news flow that added to the current market cycle was the bankruptcy of Coinbase, the largest US stock exchange. about $ 430 million loss in the first quarter of 2022.
In the latest 10-Q application, Coinbase provided the following information:
“In the event of bankruptcy, the cryptocurrencies we hold on behalf of our clients may be subject to bankruptcy proceedings.”
Regulatory uncertainty was also partly responsible for the sharp correction of Ether. On May 11, Kukmin, a South Korean-based newspaper, reported on a leaked draft of the government’s forthcoming “Digital Asset Basic Act (DABA)” bill. The South Korean government expects to implement initial monetary policy (ICOs) regulations, along with a 20% tax on cryptocurrencies over $ 2,100 per year.
Another factor affecting the market is investor confidence in stablecoins. On May 11, USD Tether (USDT), the largest stablecoin in terms of market value, went online and traded below $ 0.99 on major stock exchanges. However, Tether and Bitfinex technical director Paulo Ardoino stressed that the USDT has maintained its stability with many black tail events and “continues to process redemptions normally.”
Option traders are not willing to offer protection
To understand the position of larger traders, you should look at the future and options data of Ether. The 25% delta error is a telltale sign every time the arbitration desk and market makers charge too much for upside down or down protection.
If these traders fear a fall in Ether prices, the error indicator will exceed 10%. On the other hand, the general voltage reflects a negative 10% error. This is precisely the reason why the measure is known as the measure of fear and greed of professional traders.
The error rate has been above 10% since 23 April and peaked at 29% on 12 May. In addition to indicating strong fears from stock options sellers, the benchmark has reached the highest level ever recorded.
The last three weeks have shown an incredibly deteriorating attitude and the current 27% delta error clearly shows an imbalance in unexpected price fluctuations up and down.
Connected: Untethered – Here’s everything you need to know about TerraUSD, Tether and other stablecoins
Long to short data confirm that traders avoid risk
The long-term net ratio of top traders excludes external effects that could have affected certain derivatives. By analyzing the position of these top clients on the spot, perpetual contracts and futures contracts, it is possible to better understand whether professional traders are inclined to bullish or bearish.
There is an occasional methodological discrepancy between different exchanges, so viewers should monitor changes instead of absolute numbers.
Even though Ether has fallen 29% since March 11 to a low of $ 1,700, professional traders reduced their long-term short-term bets. The ratio of top traders OKX decreased from 1.25 to the current 0.85 points.
Binance data also show that these traders lower their long-term from 1.03 to 0.98, while at Huobi it remained unchanged at 1.00. This indicates that there was hardly any purchase from whales and market makers amid a major correction in Ether prices.
There is simply no way to sugar coat Ether’s current derivatives because both indicators reflect a lack of confidence from institutional investors. Optional traders who charge too much for height protection suggest that Ether could fall below $ 1,700 according to risk metrics.
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