Spanish Securities Regulator Orders Binance to Stop Offering Cryptocurrency Derivatives

May 6, 2022 Bitcoin.com

Descending channel pattern and weak futures data continue to constrain Ethereum price

May 5, 2022 Coin Telegraph

basis

ETH derivatives metrics and technical analysis point toward further downside for Ethereum price.

Despite bouncing from a 45-day low on April 30, Ether (ETH) price is still stuck in a descending channel and the subsequent 9% gain over the past four days was just enough to get the altcoin to test the pattern's $2,870 resistance.

*Ether/USD price at FTX. Source: TradingView*

Federal Reserve monetary policy continues to be a major influence on crypto prices and this week’s volatility is most likely connected to comments from the FOMC. On May 4, the United States Federal Reserve raised its benchmark overnight interest rate by half a percentage point, which is the biggest hike in 22 years. Although it was a widely expected and unanimous decision, the monetary authority said it would reduce its $9 trillion asset base starting in June.

Chairman Jeremy Powell explained that the Federal Reserve is determined to restore price stability even if that means hurting the economy with lower business investment and household spending. Powell also dismissed the importance of the gross domestic product decline over the first three months of 2022.

Even though Ether's price has corrected by 14% over the course of a month, the network's value locked in smart contracts (TVL) increased by 7% in 30 days to 25.2 million Ether, according to data from DefiLlama. For this reason, it is worth exploring if the price drop below $3,000 impacted derivatives traders' sentiment.

ETH futures show traders are still bearish

To understand whether the market has flipped bearish, traders must analyze the Ether futures contracts' premium, also known as the basis rate. Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

One can gauge the market sentiment by measuring the expense gap between futures and the regular spot market.

*Ether 3-month futures premium. Source: Laevitas.ch*

To compensate for traders' deposits until the trade settles, futures should trade at a 5% to 12% annualized premium in healthy markets. Yet, as displayed above, Ether's annualized premium has been below such a threshold since April 5.

Despite a slight improvement over the past 24 hours, the current 3.5% basis rate is usually deemed bearish as it signals a lack of demand for leverage buyers.

Sentiment in options markets worsened

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. For instance, the 25% delta skew compares similar call (buy) and put (sell) options.

This metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options. The opposite holds when greed is prevalent, causing the 25% delta skew indicator to shift to the negative area.

*Ether 30-day options 25% delta skew. Source: Laevitas.ch*

A 25% skew indicator range between negative 8% and positive 8% is usually considered a neutral area. However, the metric has been above such a threshold since April 16 and is currently at 14%.

With option traders paying higher premiums for downside protection, it is safe to conclude that the sentiment has worsened in the past 30 days. Presently, there is a growing sense of bearish sentiment in the market.

Of course, none of this data can predict if Ether will continue to respect the descending channel, which currently holds a $2,950 resistance. Still, considering the current derivatives data, there is reason to believe that an eventual pump above $3,000 will likely be short-lived.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin pushes to $40K, but are bulls strong enough to win Friday’s $735M options expiry?

May 4, 2022 Coin Telegraph

Bitcoin pushes to K, but are bulls strong enough to win Friday’s 5M options expiry?

Coin Telegraph

$735 million in BTC options expire on May 6 and data suggests that the current macroeconomic conditions will continue to favor bears.

Bitcoin (BTC) price has been stuck in a falling wedge pattern for the past two months and during this time it has tested the $37,600 support on multiple instances.

Adding to this “bearish” price action, BTC is down 16% year-to-date, which is in line with the Russell 2000s performance.

Bitcoin/USD 1-day chart at FTX. Source: TradingView

The real driver of Bitcoin’s current price action is investors’ concerns about worsening macroeconomic conditions. Professional investors are worried about the impact of the U.S. Federal Reserve’s tightening economic policies and on May 3, billionaire hedge fund manager Paul Tudor Jones said that the environment for investors is worse than ever because the monetary authority is raising interest rates when financial conditions are already worsening.

On May 4, CNBC reported that the European Union implemented new sanctions to phase out Russian crude oil imports within six months and European Commission President Ursula von der Leyen said, "This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined."

For these reasons, traders are increasingly concerned about the potential impact of a global macroeconomic crisis on cryptocurrency markets. If global economies enter a recession, investors will seek protection by moving away from risk-on asset classes like Bitcoin.

Bulls did not expect prices below $40,000

The open interest for the May 6 options expiry in Bitcoin is $735 million, but the actual figure will be lower since bulls were caught by surprise as BTC moved below $40,000.

*Bitcoin options aggregate open interest for May 6. Source: CoinGlass*

The 1.22 call-to-put ratio reflects the $405 million call (buy) open interest against the $330 million put (sell) options. Nevertheless, as Bitcoin stands near $39,000, 89% of the bullish bets will likely become worthless.

Meanwhile, if Bitcoin's price remains below $39,000 on May 6, bears will have $100 million worth of these put (sell) options available. This difference happens because there is no use in a right to sell Bitcoin at $36,000 if it trades above that level on expiry.

Bears can secure a $145 million profit on Friday

Below are the four most likely scenarios based on the current price action. The number of options contracts available on May 6 for call (buy) and put (sell) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $37,000 and $39,000: 500 calls (buy) vs. 4,300 puts (sell). The net result favors bears by $145 million.
Between $39,000 and $40,000: 1,200 calls (buy) vs. 2,500 puts (sell). Bears have a $50 million advantage.
Between $40,000 and $41,000: 3,800 calls (buy) vs. 1,100 puts (sell). The net result favors bulls by $105 million.
Between $41,000 and $42,000: 5,300 calls (buy) vs. 700 puts (sell). Bulls boost their gains to $190 million.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there's no easy way to estimate this effect.

Bitcoin bears need to sustain the price below $39,000 on May 6 to secure a $145 million profit. On the other hand, bulls can avoid a loss by pushing BTC above $40,000, enough to net them $100 million in gains. Considering the bearish macroeconomic conditions, bears seem better positioned for May 6's expiry.

3 reasons why Bitcoin price is clinging to $38,000

May 3, 2022 Coin Telegraph

3 reasons why Bitcoin price is clinging to ,000

basis

BTC is in a lengthy downtrend but three key price metrics explain why traders are confident that the $38,000 level will hold.

Bitcoin (BTC) has been unable to break from the 26-day-long descending channel. Investors are uncomfortable holding volatile assets after the United States Federal Reserve pledged to reduce its $9 trillion balance sheet.

While inflation has been surging worldwide, the first signs of an economic downturn showed as the United Kingdom's retail sales fell 1.4% in March. Moreover, Japan's industrial production dropped 1.7% in March. Lastly, the U.S. gross domestic product fell 1.4% in the first quarter of 2022.I

*Bitcoin/USD price at FTX. Source: TradingView*

This bearish macroeconomic scenario can partially explain why Bitcoin has been on a downtrend since early April. Still, one needs to analyze how professional traders position themselves and derivatives markets to provide some excellent indicators.

The Bitcoin futures premium is is muted

To understand whether the current bearish trend reflects top traders' sentiment, one should analyze Bitcoin's futures contracts premium, which is also known as a "basis."

Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges. A bearish market sentiment causes the three-month futures contract to trade at a 5% or lower annualized premium (basis).

On the other hand, a neutral market should present a 5% to 12% basis, reflecting market participants' unwillingness to lock in Bitcoin for cheap until the trade settles.

*Bitcoin 3-month futures premium. Source: laevitas.ch*

The above chart shows that Bitcoin's futures premium has been below 5% since April 6, indicating that futures market participants are reluctant to open leverage long (buy) positions.

Options traders remain in the "fear" zone

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than the call options.

The opposite holds when market makers are bullish, causing the 25% delta skew to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.

*Deribit Bitcoin 30-day options 25% delta skew. Source: laevitas.ch*

The above chart shows that Bitcoin option traders have been signaling "fear" since April 8, just as BTC broke below $42,500 following a 10% drop in four days. Of course, such a metric could be reflecting the 16% negative BTC price performance over the past month, so not exactly a surprise.

Margin markets sustain its optimism

Margin trading allows investors to borrow cryptocurrency and leverage their trading position, thus potentially increasing returns. For example, a trader can buy cryptocurrencies by borrowing Tether (USDT) to increase their exposure.

On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price decline. Unlike futures contracts, the balance between margin longs and shorts isn't always matched.

*OKEx USDT/BTC margin lending ratio. Source: OKEx*

The above chart shows that traders have been borrowing more Bitcoin recently, as the ratio decreased from 20 on April 30 to the current 12.5. The higher the indicator, the more confident professional traders are with Bitcoin's price.

Despite some additional Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic according to the USDT/BTC lending ratio.

Bitcoin traders fear further correction as macroeconomic indicators deteriorate as investors expect a potential crisis impact on riskier markets. However, there are no signs of leverage short (negative) bets using margin or futures, meaning sellers lack conviction at $38,000.

Afraid to buy the dip? Bitcoin options provide a safer way to ‘go long’ from $38K

May 2, 2022 Coin Telegraph

Afraid to buy the dip? Bitcoin options provide a safer way to ‘go long’ from K

Coin Telegraph

BTC price continues to trade in a wide range, providing an opportunity for options traders to use the Iron Condor strategy.

The last time Bitcoin (BTC) traded above $50,000 was Dec. 27, 2021. Since then, four months have passed, but traders seem somewhat optimistic that inflation has hit the necessary threshold to trigger cryptocurrency adoption.

In theory, the 8.5% inflation in the United States means that every five years, the prices increase by 50%. This essentially turns $100 into $66 by slashing 33% of the dollar’s purchasing power.

The U.S. Federal Reserve FOMC meeting is expected to rule on the interest rates on May 4, but more importantly, the FED is expected to announce a program to offload part of its $9 trillion balance sheet. Thus, instead of supporting debt and mortgage markets, the U.S. Central Bank will likely sell $95 billion worth of these assets every month.

The consequences could be severe and risk markets have priced in such a scenario. For instance, the Rusell 2000 mid-capitalization stock market index is down 16.5% year-to-date in 2022. Similarly, as measured by the MSCI China index, the Chinese stock market is currently facing a 20% correction year-to-date.

There is no way to know what will trigger a Bitcoin bull run, but a report by Glassnode on April 18 has detected "a large amount of coin supply" accumulating between $38,000 and $45,000. For traders who believe BTC will reach $50,000 by July, there is a low-risk options strategy that can be used to cast a long bullish bet.

The skewed 'iron condor' has a limited downside

Following the whales and large investors usually pays off, but most traders are looking for ways to maximize gains while also limiting losses. For example, the skewed "iron condor" maximizes profits near $50,000 by July by limiting losses below $38,000.

*Bitcoin options Iron condor skewed strategy returns. Source: Deribit Position Builder*

The call option gives the buyer the right to acquire an asset at a fixed price in the future and the buyer pays an upfront fee known as a premium for this privilege.

On the other hand, the put option provides its buyer the privilege to sell an asset at a fixed price in the future — a downside protection strategy. Meanwhile, selling this instrument offers exposure to the price upside.

The iron condor consists in selling both the call and put options at the same expiry price and date. The above example has been set using the BTC July 29 options.

The profit area lies between $40,500 and $60,500

To initiate the trade, the investor needs to short 1 contract of the $44,000 call option and another 1.4 contracts of the $44,000 put option. Then, the buyer needs to repeat the procedure for the $50,000 options, using the same expiry month.

To protect from an eventual downside, one should buy 3.46 contracts of the $38,000 put option. Lastly, one should buy 1.3 contracts of the $70,000 call option to limit losses above the level.

This strategy yields a net gain if Bitcoin trades between $40,500, 4% above the current $38,900 price, and $60,500 on July 29. Net profits peak at 0.33 BTC at $50,000, but remain above 0.21 BTC between $43,200 and $53,400.

Meanwhile, the maximum loss is 0.21 BTC in either extreme if, on July 29, Bitcoin price trades below $38,000 or above $70,000, both of which seem rather unlikely.

Derivatives, Spot Markets, Dex Swaps — 30 Day Crypto Trade Volumes Slipped Across the Board Last Month

May 2, 2022 Bitcoin.com

FTX executive Wetjen calls CFTC application an opportunity for the agency to innovate

April 28, 2022 Coin Telegraph

Coin Telegraph

Former CFTC head Giancarlo said a “central bank mindset” is holding crypto back, and Wetjen saw the need for more entrepreneurialism in regulatory agencies.

Former Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo, known by some as Crypto Dad during his tenure from 2017 to 2019, spoke Thursday at the Crypto Bahamas conference on the topic of U.S. crypto regulation. He called the current U.S. regulations, many of which were written in the 1930s, “nonapplicable” to the current financial reality of cryptocurrencies.

Giancarlo expressed concern that central banks were usurping crypto. “If you read the utterances out of the European Central Bank, there is nothing but FUD toward non-sovereign crypto,” he said, noting that China took the same approach when it banned all cryptos except the digital yuan CBDC.

The executive went on to found the Digital Dollar Foundation after his service in the CFTC, said that regulation is being carried out against a backdrop of “septuagenarian leadership […] not just in the White House. It’s throughout the government.”

Giancarlo spoke on a panel with former CFTC commissioner Mark Wetjen, who joined FTX as head of policy and regulatory strategy late last year. Wetjen argued that U.S. regulatory agencies have “a fair number of authorities to massage the rules and figure out how to slot products into the regime.”

“What we really need to see, I think, is more entrepreneurialism and aggressiveness on the part of the staff at the agencies,” and leadership in the agencies to guide that approach, Wetjen said.

“The FTX application for the CFTC is an opportunity for the agency to do something innovative for itself,” Wetjen said, referring to the company’s proposal that it allow clearing of margined products directly to participants. “We’re not asking for any special treatment. Nothing of the sort. This is a model that can fit within regime.”

“What we’re offering, and what the application reflects, is the option […] for participants to come to the platform without any intermediary involved. But that’s an option.” Wetjen added:

“In other words, if brokers and intermediaries want to come to the platform and bring their customers, that’s also permitted.”

Wetjen characterized the FTX proposal as a “real time risk model” and something that has not been seen before in the U.S. The intermediated model is a uniquely American model, Giancarlo interjected, whereas crypto has emerged around the world.

Synthetix (SNX) rallies in anticipation of L2 Curve Wars and Optimism airdrop announcement

April 27, 2022 Coin Telegraph

Altcoin Watch

SNX price got a boost after the project geared up for participation in the L2 Curve Wars and Optimism airdrop hunters engaged with the protocol.

Layer-two (L2) solutions for the Ethereum (ETH) network have grown in prominence over the last year because of the need for scalable networks that offer low-fee transactions and led to numerous projects that built cross-chain bridges with competing blockchain networks.

One project that has benefitted from the growth of the L2 scaling solutions is Synthetix (SNX), a decentralized finance (DeFi) protocol that enables the creation of synthetic assets and offers exposure to derivatives and futures trading on blockchain.

Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $4.44 on April 11, the price of SNX rallied 52.6% to hit a daily high at $6.78 on April 26 before a widespread market downturn dropped it back down to $5.90.

*SNX/USDT 1-day chart. Source: TradingView*

While the majority of the market is down, there are potential catalysts for SNX price to see further appreciation.

Launch on Optimism

One of the biggest developments for the Synthetix protocol was its launch on Optimism, a L2 network which is making waves this week thanks to an airdrop announcement. SNX staking began on Jan. 16 and as the network grows, speculators are giddy at the prospect of future airdrops and staking incentives.

Most recently, Synthetix used its launch on Optimism to get more involved in the “Curve Wars” and currently, it is offering the highest bribe to get veCRV voters to incentivize voting for the sUSD Curve pool.

Synthetix has also partnered with Lyra Finance (LYRA) to offer 12,000 SNX and 50,000 LYRA per week as an added incentive for veCRV voters.

L2 airdrop season could be a catalyst for SNX

A second reason the price of SNX has the potential to see further appreciation is traders' expectation that an airdrop season for L2 protocols could occur.

There has been a significant amount of speculation that Optimism and Arbitrum, two of the most popular L2 networks in the crypto ecosystem, would eventually airdrop their protocol tokens to early adopters of the networks.

This speculation became reality after Optimism released the initial details of the Optimism Collective, a “large-scale experiment in digital democratic governance” that is “built to drive rapid and sustainable growth of a decentralized ecosystem.”

Along with the launch of the Optimism Collective comes the launch of the OP governance token, of which 5% of the initial supply will be airdropped to early adopters. For those who did not qualify for the first airdrop round, there is still a chance to qualify for future airdrops by being active on the network using protocols like Synthetix.

With Synthetix offering futures trading on Optimism, the protocol could benefit from users seeking ways to be active on the network and this could increase demand for SNX.

On top of the potential to receive an OP airdrop, SNX holers have also been lured to Optimism by the 81% staking rewards currently being offered by the protocol.

Climbing user base and volume transacted

Further evidence of the rising popularity of Synthetix can be found looking at the platform's metrics on Optimism, which have been steadily increasing for the past month according to data from Dune Analytics.

*Synthetix protocol metrics. Source: Dune Analytics*

As shown in the graphic above, the number of unique traders on the protocol has been climbing since launching futures trading in mid-March and the protocol has handled nearly $1.59 billion in total volume.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for SNX on April 23, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

*VORTECS™ Score (green) vs. SNX price. Source:* *Cointelegraph Markets Pro*

As seen in the chart above, the VORTECS™ Score for SNX climbed into the green zone and hit a high of 77 on April 23, around 39 hours before the price spiked 28% over the next day.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Here’s why Bitcoin bears aim to pin BTC under $39K ahead of Friday’s $1.9B options expiry

April 27, 2022 Coin Telegraph

<div>Here's why Bitcoin bears aim to pin BTC under K ahead of Friday's .9B options expiry</div>

Coin Telegraph

Holding BTC price below $39,000 will give bears a $350 million profit in this week’s $1.9 billion options expiry.

Up until April 25, Bitcoin (BTC) bulls had been defending the $38,000 level, but bulls were caught off-guard by the recent drop. As Bitcoin plunged from $46,700 to $37,700 between April 5 and 26, most of the bullish bets for the upcoming $1.96 billion monthly options expiry became worthless.

Regulatory concerns continue to pose a threat to Bitcoin and on April 26 the New York State Assembly passed a bill banning new proof-of-work (PoW) cryptocurrency carbon-based mining facilities in the state. Fortunately for Bitcoin, mining equipment is portable, so there's no real risk to the Bitcoin network's security but the steady threat of anti-crypto legislation can have an impact on price.

Geopolitical tension in Europe also led investors to avoid riskier assets and many are seeking protection in U.S. dollar-denominated assets. CNBC reported that the impact of Russian state energy firm Gazprom's decision to halt natural gas supplies to Poland and Bulgaria, created concerns about a deeper economic slowdown in the Eurozone region.

Investors are also obsessed with the potential U.S. Federal Reserve rate 250 basis point rate hike planned throughout 2022. The maneuver aims to contain inflationary pressure but it could spin global economies into a recession and this is another reason why investors are avoiding highly-volatile assets like cryptocurrencies.

Bulls did not expect prices below $40,000

The open interest for the April 29 options expiry in Bitcoin is $2 billion, but the actual figure will be much lower since bulls were not expecting the BTC price to drop below $40,000.

These traders might have been fooled as Bitcoin held above $45,000 between March 27 and April 6, placing enormous bets for the monthly options expiry above $50,000.

*Bitcoin options aggregate open interest for April 29. Source: CoinGlass*

The 1.55 call-to-put ratio shows more sizable bullish bets as the call (buy) open interest stands at $1.19 billion against the $770 million puts (sell) options. Nevertheless, as Bitcoin stands near $39,000, most bullish bets will likely become worthless.

For instance, if Bitcoin's price stays below $40,000 at 8:00 am UTC on April 29, only $60 million worth of these calls (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $40,000 if it trades below that level on expiry.

Bulls need $41,000 to balance the scales

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Friday for call (buy) and put (sell) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $37,000 and $39,000: 600 calls vs. 9,800 puts. The net result favors the put (bear) instruments by $350 million.
Between $39,000 and $40,000: 1,500 calls vs. 8,300 puts. The net result favors bears by $260 million.
Between $40,000 and $41,000: 3,400 calls vs. 5,600 puts. Bears remain better positioned by $90 million.
Between $41,000 and $42,000: 4,100 calls vs. 4,700 puts. favors the put (bear) instruments by $30 million.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately, there's no easy way to estimate this effect.

Bears are aiming for a $350 million profit

Bitcoin bears need to pressure the price below $39,000 on April 29 to secure a $350 million profit. On the other hand, the bulls' best case scenario requires a 6% price push above $41,000 to cut their losses to $30 million.

Bitcoin bulls had $330 million leverage long positions liquidated in the past 7 days, so they might have less margin required to drive Bitcoin price higher. With that in mind, bears will likely try to suppress BTC below $39,000 until the April 29 options expiry.

Ethereum on-chain data hints at further downside for ETH price

April 26, 2022 Coin Telegraph

Coin Telegraph

An assortment of on-chain and derivatives data signal that ETH price is unlikely to rally above $3,500 any time soon.

Analyzing Ether's (ETH) current price chart paints a bearish picture which is largely justified by the 11% drop over the past month, but other traditional finance assets faced more extreme price corrections in the same period. The Invesco China Technology ETF ($CQQ) is down 31% and the Russell 2000 declined by 8%.

*Ether price at FTX, in USD. Source: TradingView*

Currently, traders fear that losing the descending channel support at $2,850 could lead to a stronger price downturn, but this largely depends on how derivatives traders are positioned along with the Ethereum network's on-chain metrics.

According to Defi Llama, the Ethereum network's total value locked (TVL) flattened in the last 30 days at 27 million Ether. TVL measures the number of coins deposited on smart contracts, including decentralized finance (DeFi), NFT marketplaces, gaming and high-risk applications.

The Ethereum network's average transaction fee increased to $13 after bottoming at $11.50 on April 20 but one should analyze whether this reflects decreased use of decentralized applications (DApps) or merely if it is users benefiting from layer-2 scaling solutions.

Ether's futures premium tilts toward bears

Traders use Ether futures market data to understand how professional traders are positioned, but unlike the standard perpetual futures, the quarterly contracts are whales and market makers' preferred instruments because they can avoid the fluctuating funding rate.

The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. In neutral markets, the Ether futures annualized premium should run between 5% to 12% to compensate traders for "locking in" the money until the contract expiry.

*Ether 3-month futures annualized premium. Source: Laevitas.ch*

The current 2% Ether futures basis clearly shows the lack of demand for leverage buyers. Although not precisely a backwardation (negative premium), an annualized futures premium below 5% is usually deemed bearish.

This data tells us that pro traders have been neutral-to-bearish in the past couple months, but to exclude externalities that might have influenced derivatives data, one should analyze the Ethereum network on-chain data. For example, monitoring the network use tells us whether actual use cases support the demand for Ether.

On-chain metrics are sluggish

Measuring the number of active addresses on the network provides a quick and reliable indicator of effective use. Of course, this metric could be misguided by the increasing adoption of layer-2 solutions, but it works as a starting point.

*7-day average of active addresses on Ethereum. Source: CoinMetrics*

The current 584,477 daily active addresses average is a 4% decrease from 30 days ago and nowhere near the 675,117 seen in November 2021. Thus, data shows that Ether token transactions are not showing signs of growth, at least on the primary layer.

Traders should rely on DApp usage indicators, but avoid exclusive focus on the TVL because that metric is heavily concentrated on DeFi applications. Gauging the number of active addresses provides a broader view.

*Ethereum network 30-day DApps activity. Source: DappRadar*

Ethereum DApps active addresses have flatlined over the past 30 days. Overall, the data is slightly disappointing, considering competing chains such as Solana saw a 34% active addresses increase.

Unless there’s decent growth in Ether transactions and DApp usage, the $2,850 descending support channel resistance might not hold, triggering a deeper short-term price correction.

derivatives

ETH futures show traders are still bearish

Sentiment in options markets worsened

Bulls did not expect prices below $40,000

Bears can secure a $145 million profit on Friday

The Bitcoin futures premium is is muted

Options traders remain in the "fear" zone

Margin markets sustain its optimism

The skewed 'iron condor' has a limited downside

The profit area lies between $40,500 and $60,500

Launch on Optimism

L2 airdrop season could be a catalyst for SNX

Climbing user base and volume transacted

Bulls did not expect prices below $40,000

Bulls need $41,000 to balance the scales

Bears are aiming for a $350 million profit

Ether's futures premium tilts toward bears

On-chain metrics are sluggish

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