Traders are forecasting an Ethereum price of $ 3,000, but the data on derivatives suggests otherwise


Ether (ETH) is up 35% in the past ten days and recaptured critical support of $ 2,300, but the crucial local high of $ 2,450 has not been tested since June 17th. Part of the recent rebound can be attributed to the London hard fork expected to go live on August 4th.

Traders and investors see the introduction of EIP-1559 as an optimistic factor in the price of ether as it is expected to lower gas tariffs. Ether miners are not enthusiastic about the proposal, however, as the proof-of-work model is no longer required after the go-live of ETH2.0.

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Network charges are set automatically, but users can pay extra for faster verification. Miners (or future validators) will receive this additional fee, but the base fee will be burned. In short, ether is likely to become deflationary.

Ether price in USD at Bitstamp. Source: TradingView

While it is difficult to identify the main drivers behind the recent rally, it is possible to gauge the sentiment of professional traders by analyzing derivatives metrics.

If recent price action was enough to instill confidence, the futures contract premiums and options distortion should clearly reflect that change.

Bullish sentiment lacks even after futures contracts entered contango

By analyzing the price difference between futures contracts and regular spot markets, one can better understand the prevailing sentiment among professional traders.

The 3-month futures should be traded at an annualized premium of 6% to 14% on neutral to bullish markets, which corresponds to the loan rate of stablecoins. By postponing billing, sellers charge a higher price and this causes the premium.

Whenever the futures premium subsides or turns negative, it raises an alarming red flag. This situation is also known as backwardation and indicates a bearish sentiment.

September Ether Futures Premium at OKEx. Source: TradingView

The graph above shows that the Ether futures premium turned negative on July 20 when Ether tested the $ 1,750 support. But even the massive rally to USD 2,450 was not enough to push the contract premium above 1.3% in September, which is an annualized 8%.

Had there been any excitement, the annualized futures premium would have been 12% or more. Therefore, the attitude of professional traders seems to be neutral at the moment and flirt with bear market.

In order to rule out external effects that apply exclusively to the futures instrument, traders should also analyze the options markets.

Options markets confirm that professional traders are not optimistic

Whenever market makers and whales tend to be bullish, they will charge a higher premium for call options. This move results in a negative shift in the 25% delta skew indicator.

On the other hand, the 25% delta skew indicator becomes positive when the downside protection (put option) is more expensive.

Ether 1 month options 25% delta skew. Source:

Readings between minus 10% and plus 10% are usually considered neutral. The indicator had signaled “fear” between May 20th and July 19th, but improved quickly after holding the USD 1,750 support.

Nevertheless, the current delta skew of 25% at minus 4 is not sufficient to configure a “greed” indicator. The pricing on the options markets is currently well balanced between call (buy) and put (sell) options.

Both derivatives metrics suggest that professional traders were starting to get out of fear mode on July 20th, but they are nowhere near bullish.

Right now, from these metrics perspective, there is little confidence in the recent rally, which is understandable given the risks posed by the impending hard fork and the uncertainty posed by dissatisfied miners.

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