Today, Ether (ETH) price briefly hit $ 4,760, which is exciting for investors and a reminder to the world that the altcoin is just 2.2% below the all-time high of $ 4,870 that was hit 20 days ago. While the spot price action may be fascinating, let’s see what is happening in the ether derivatives markets.
Ether ETH / USD price at Bitstamp. Source: TradingView
While it is possible to draw a descending channel showing support at $ 3,960, today’s positive move of 5.4% seems decoupled from the negative performance of Bitcoin (BTC).
Commodities and stocks took a hit today after the US Federal Reserve recognized that inflation was more than a “passing” trend and Fed chief Jerome Powell said the bank’s loose monetary policy could end sooner than expected.
Retailers are not entirely confident
To understand how confident traders are about the recovery in Ether, one should analyze futures data for perpetual contracts. This instrument is the preferred market for retailers as its price tends to mimic the regular spot markets.
In any futures contract trade, longs (buyers) and shorts (sellers) are merged at all times, but their leverage varies. As a result, exchanges charge a funding rate from the side that requires more leverage, and that fee is paid to the other side.
Ether Perpetual Futures 8-hour financing rate. Source: Coinglass.com
Neutral markets typically have a positive funding rate of 0% to 0.03%, which is 0.6% per week. This suggests that long positions are paying off, and the data shows that retailers have been broadly neutral since November 4th, with the last move above 0.07% on October 21st.
Top traders have reduced their long positions
Data provided by the exchange highlights traders’ net long-to-short positioning. By analyzing each local client’s position, perpetual and futures contracts, one can better understand whether professional traders are bullish or bearish.
There are occasional discrepancies in methodology between different exchanges, so viewers should watch changes rather than absolute numbers.
Exchanges top trader ETH long-to-short ratio. Source: Coinglass.com
Despite Ether’s 17% rally over the past four days, the top traders at Huobi and OKEx have trimmed their long positions. That move was even more evident on OKEx as the indicator made a drastic move, from favoring the bulls by 120% on November 25th to a meager 30% advantage three days later.
Currently, data suggests that whales and arbitrage desks have reduced their long exposure while retailers remain suspicious of the recent bull run.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You should do your own research when making a decision.