Ethereum Yet To Surpass $1500 Since The Merge

Traders’ sentiment toward Ethereum has improved substantially as the price gained 7.5% from October 2nd to 6th. Also, the price of Ethereum has reclaimed the $1,350 mark. However, this move did not elicit any bullish action from futures traders.

ETH Has Dipped By 32% Since August 14th

Ethereum’s trading price is 32% lower than the $2,000 level last observed on August 14th. Also, its average transaction cost has been about $2 since the Merge.

ETH/USD Trading Price. Source: TradingView

On September 15th, the Ethereum blockchain moved from the energy-intensive PoW to the PoS. This move eliminated the need for miners to act as validators and introduced staking.

The Merge helped tackle parallel processing capacity. It was not meant to solve the scalability issue in the current phase. DappRadar, an analytics platform, reveals that the Ethereum blockchain contains none of the top five dApps.

Therefore, analyzing future data might be helpful to investors. It would help them determine if Ethereum will maintain its surge and reach $1,500 or higher.

Usually, retail traders avoid futures markets because of the price gap between them and spot markets. However, quarterly futures are the favorite for expert traders. This is because it eliminates the constant change of contract financing rates.

Additionally, these fixed-month contracts often trade at a modest premium to spot markets in neutral-to-bullish markets. 

The reason is that investors are looking for more money to withhold the settlement. This is not unique to cryptocurrency, and futures contracts in healthy markets should trade at a 4% to 8% annual premium.

Ethereum Traders Show No Confidence In The Market 

Since the Merge, the Ethereum futures premium has been negative. This signals high demand for bearish bets, a dangerous circumstance called “backwardation.”

Therefore, traders must examine the Ethereum options markets. This will help them avoid externalities related to futures contracts.

When market makers and arbitrage desks overcharge for downside or upside protection, the skew indicator goes above 25%. Meanwhile, in positive markets, options traders increase their probabilities of a price increase. This causes the skew indicator to fall below -12%. 

Meanwhile, derivatives metrics reveal that professional traders do not believe ETH will test the $1,500 level. Also, futures contracts are trading at a loss to spot market pricing.

This signals a lack of confidence in leveraged longs. Meanwhile, Ethereum option traders are pricing comparable bear and bull scenarios. This demonstrates little confidence in the latest 7.5% price rise.

Given that regulatory and macroeconomic concerns drive the trend, it may be challenging for Ethereum bulls to advance. Therefore, a 10% surprise surge toward $1,500 would catch bears off guard and force them to liquidate short holdings.