Today’s ETH dump changed the annual futures base by 10% after conquering extremely optimistic territory. The underlying index compares the price of a futures contract with the current level of traditional spot exchanges.
Healthy markets usually show between 5% and 15% per year in a condition called contango. On the other hand, a futures premium usually occurs in very bearish markets.
The chart above shows the annual basis for Ether futures, which rose above 20% yesterday and are usually volatile. The same move took place on August 13, when the ether overcame the $ 420 resistance, but could not stay at that level for less than a week.
A baseline above 20% is not necessarily a warning before the accident, but a satisfactory future contract. This over-confidence poses a greater risk if the market falls below $ 420.
This is not a magic number, but a level when the norm exceeds 15%, which indicates a greater burden on buyers.
Sellers did not start
Those who bet $ 500 should be happy to know that open interest has increased, despite rising 35% in 30 days, to $ 480. Those who expect negative price movement have not gone out of business long after this strong rally.
The open interest rate on Ether futures peaked at $ 1.7 billion on August 14 and is currently at $ 1.5 billion. This indicates that potential sellers mainly use arbitrage to obtain the base premium mentioned above.
Cash and carry trading consists of buying an underlying asset and selling a futures contract at the same time. This is a completely secure transaction and can therefore not be closed due to leverage. Thus, such a constant increase in open interest, despite strong growth, is a positive sign.
The ether options have also reached alarming levels
Most indices in the options market are lagging behind and are thus affected by the increase in Ether in the last month. On the other hand, previous market conditions do not affect 25% of the difference between the options index.
Although it may sound scary, and it is actually the mathematics behind it, it is relatively easy to analyze such an indicator.
A positive partial deviation of 25% indicates that put options are more expensive than similar (buy) options, and therefore indicates a downward trend. On the other hand, negative sentiment indicates a bullish trend.
As in the case of the primary index for the futures markets, we have seen great optimism about trading in ether options lately. The monthly delta shift affected 25% in a short period of -22%, close to the lowest level ever recorded.
It is currently at -12%, which indicates that option traders are asking for more funds to protect another up-option.
This would not be the case if market producers and knowledgeable players chose a side market or a short-term correction.
Spot exchange volumes are also optimistic.
Volumes on traditional stock exchanges make it clear whether the trend is winning or not.
When volume declines after intense flight, it must maintain a normal level to keep Ether levels above $ 420.
The data above shows exactly how the daily volume exceeded $ 800 million when Ether broke the $ 250 price resistance. The current average daily volume above $ 1 billion shows no signs of declining.
The data in the series confirms the bullish trend.
The Ethereum network has grown steadily throughout the year. Despite the possibility of a decentralized fiscal mania, there is a clear demand for blockchain.
The chart above is a compelling sign for real-life cases that have supported 230% price increases over the past five months. Resellers tend to focus on the short term when analyzing timelines and sometimes forget to look at the broader data.
Current daily transactions of almost 1.1 million transactions are approaching their peak in January 2018, while Ether is still 65% below the $ 1,386 high.
Although this was a concern at first, the delta has strayed 25% from and around future bases.