Ether (ETH) price is 13% behind Bitcoin (BTC) in October, but is it appropriate? So far, the altcoin has continued to surpass BTC by 274% in 2021. However, traders tend to be short-term, and some will question whether the Ethereum network can successfully transition to Proof of Stake (PoS) and eventually solve the high tax issue. on gas. Problem.
Bitcoin and Ether prices on Bitstamp. Source: TradingView
Moreover, the growing competition from smart contract networks such as Solana (SOL) and Avalanche (AVAX) worries investors:
According to Cointelegraph, recent rumors about the possible approval of the Bitcoin Exchange Trading Fund (ETF) have boosted traders’ appetite for BTC. The US Securities and Exchange Commission (SEC) is expected to announce its decision on several ETF applications in the coming weeks. However, there is still a possibility that the regulator will postpone these appointments.
Professional traders are not worried about the recent price slump.
To determine if professional traders are leaning against bearish will, one must first analyze the futures premium, also known as the underlying price. This indicator measures the price gap between futures prices and prices in the regular spot market.
Quarterly ether futures are the preferred instruments for whale charts and arbitrage. These derivatives may seem daunting to retail traders due to settlement dates and price differences compared to the spot markets, but their main advantage is the lack of volatile funding rates.
Base price of 3-month Ether futures contract. Source: Laevitas.ch
Three-month futures contracts are usually traded at an annual premium of 5% to 15%, which is in line with the interest rate on stablecoins. By delaying settlement, sellers demand a higher price, and this leads to the price difference.
As shown above, Ether’s inability to overcome the $3,600 resistance did not change the sentiment of professional traders, as the base rate remained at 13%. This indicates that there is no excessive optimism at the moment.
Traders have been neutral for the past five weeks.
Retailers tend to opt for perpetual contracts (reverse swaps), in which a commission is charged every eight hours to balance demand for impact. To understand whether there is a kind of panic selling, it is necessary to analyze the level of financing in the futures markets.
Ether perpetual futures contract, 8 hour funding rate. Source: Bybt
In neutral markets, the funding rate tends to fluctuate from 0% to 0.03% in a positive direction. This commission corresponds to 0.6% per week and indicates that long positions pay off.
Since September 7, there has been no real indication of a strong demand for influence by bulls or bears. This balanced situation reflects the retailers’ lack of desire to take advantage of long deals, but at the same time showing little panic or excessive fear.
Derivatives markets are showing that Ether investors are not worried about the recent delay behind Bitcoin. In addition, the lack of a very long effect should reflect positively after an increase of 274% since the beginning of the year.
Leaving room for optimism without compromising the derivatives market structure, it appears that Ethereum traders are accumulating above their highs, especially if the Bitcoin ETF is approved.
