{"id":480870,"date":"2022-08-04T00:15:00","date_gmt":"2022-08-03T21:15:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength\/"},"modified":"2022-08-04T00:15:00","modified_gmt":"2022-08-03T21:15:00","slug":"3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength\/","title":{"rendered":"# 3 key Ethereum derivatives metrics suggest $1,600 ETH support lacks strength"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3cd93a32c3b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3cd93a32c3b\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength\/#%E2%80%9D_3_key_Ethereum_derivatives_metrics_suggest_1600_ETH_support_lacks_strength_%E2%80%9C\" >&#8221; 3 key Ethereum derivatives metrics suggest $1,600 ETH support lacks strength &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength\/#Options_traders_are_neutral_exiting_the_%E2%80%9Cfear%E2%80%9D_zone\" >Options traders are neutral, exiting the \u201cfear\u201d zone<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/3-key-ethereum-derivatives-metrics-suggest-1600-eth-support-lacks-strength\/#Margin_traders_are_reducing_their_bullish_bets\" >Margin traders are reducing their bullish bets<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_3_key_Ethereum_derivatives_metrics_suggest_1600_ETH_support_lacks_strength_%E2%80%9C\"><\/span>&#8221; 3 key Ethereum derivatives metrics suggest $1,600 ETH support lacks strength &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-28d77a7a>Ether (ETH) price is up 60% since May 3, outperforming leading cryptocurrency Bitcoin (BTC) by 32% over that span. However, evidence suggests the current $1,600 support lacks strength as network use and smart contract deposit metrics weakened. Moreover, ETH derivatives show increasing sell pressure from margin traders.<\/p>\n<p>The positive price move was primarily driven by growing certainty of the &#8220;Ethereum merge&#8221; transition to a proof-of-stake (PoS) consensus network in September. During the Ethereum core developers conference call on July 14, developer Tim Beiko proposed Sept. 19 as the tentative target date. In addition, analysts expect the new supply of ETH to be reduced by up to 90% after the network&#8217;s monetary policy change, thus a bullish catalyst.<\/p>\n<p>Ethereum&#8217;s total value locked (TVL) has vastly benefited from Terra&#8217;s ecosystem collapse in mid-May. Investors shifted their decentralized finance (DeFi) deposits to the Ethereum network thanks to its robust security and battle-tested <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications, including MakerDAO (MKR) \u2014 the project behind the DAI stablecoin.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/6431085c-b166-41c7-a95f-87076de6cee3.png\"><figcaption style=\"text-align: center;\"><em>Total value locked by market share. Source: Defi Llama<\/em><\/figcaption><\/figure>\n<p>Currently, the Ethereum network holds a 59% market share of TVL, up from 51% on May 3, according to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/defillama.com\/chains\">data<\/a> from Defi Llama. Despite gaining share, Ethereum&#8217;s current $40 billion deposits on smart contracts seem small compared to the $100 billion seen in December 2021.<\/p>\n<p>Demand for decentralized application (DApp) use on Ethereum seems to have weakened, considering the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>n transfer fees, or gas costs, which currently stand at $0.90. That&#8217;s a sharp drop from May 3, when the network transaction costs surpassed $7.50 on average. Still, one might argue that higher use of layer-2 solutions such as Polygon and Arbitrum are responsible for the lower gas fees. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Options_traders_are_neutral_exiting_the_%E2%80%9Cfear%E2%80%9D_zone\"><\/span>Options traders are neutral, exiting the \u201cfear\u201d zone<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To understand how whales and market makers are positioned, traders should look at Ether&#8217;s derivatives market data. In that sense, the 25% delta skew is a telling sign whenever professional traders overcharge for upside or downside protection.<\/p>\n<p>If investors expect Ether&#8217;s price to rally, the skew indicator moves to -12% or lower, reflecting <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ized excitement. On the other hand, a skew above 12% shows reluctance to take bearish strategies, typical of bear markets.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/84433290-f9a3-43c7-978f-ca64a0323806.png\"><figcaption style=\"text-align: center;\"><em>Ether 30-day options 25% delta skew: Source: Laevitas.ch<\/em><\/figcaption><\/figure>\n<p>For reference, the higher the index, the less inclined traders are to price downside risk. As displayed above, the skew indicator exited &#8220;fear&#8221; mode on July 16 as ETH broke above the $1,300 resistance. Thus, those option traders no longer have higher odds of a market downturn as the skew remains below 12%. <\/p>\n<p><strong><em>Related:\u00a0Ethereum will outpace Visa with zkEVM Rollups, says Polygon co-founder<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Margin_traders_are_reducing_their_bullish_bets\"><\/span>Margin traders are reducing their bullish bets<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To confirm whether these movements were confined to the specific options instrument, one should analyze the margin markets. Lending allows investors to leverage their positions to buy more cryptocurrency. When those savvy traders open margin longs, their gains (and potential losses) depend on Ether&#8217;s price increase.<\/p>\n<p>Bitfinex margin traders are known for creating position contracts of 100,000 ETH or higher in a very short time, indicating the participation of whales and large arbitrage desks.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/8d70d687-7e13-4931-bdc6-f1e36e8ec845.png\"><figcaption style=\"text-align: center;\"><em>Bitfinex ETH margin longs. Source: Coinglass<\/em><\/figcaption><\/figure>\n<p>Ether margin longs peaked at 500,000 ETH on July 2, the highest level since November 2021. However, data shows those savvy traders have reduced their bullish bets as the ETH price recovered some of its losses. Data shows no evidence of Bitfinex margin traders anticipating the 65% correction from May to sub-$1,000 in mid-June.<\/p>\n<p>Options risk metrics show pro traders are less fearful of a potential crash, but at the same time, margin markets players have been unwinding bullish positions as the ETH price tries to establish a $1,600 support. <\/p>\n<p>Apparently, investors will continue to monitor the impacts of nominal TVL deposits and demand for smart contracts on network gas fees before making additional bullish bets.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> 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.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/3-key-ethereum-derivatives-metrics-suggest-that-1-600-eth-support-lacks-strength\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; 3 key Ethereum derivatives metrics suggest $1,600 ETH support lacks strength &#8220; Ether (ETH) price is up 60% since May 3, outperforming leading cryptocurrency Bitcoin (BTC) by 32% over that span. However, evidence suggests the current $1,600 support lacks strength as network use and smart contract deposit metrics weakened. Moreover, ETH derivatives show increasing&#8230;<\/p>\n","protected":false},"author":1,"featured_media":480871,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDgvZGJiZWM5NWQtZDczOS00ZTQ5LWEzMTktYTUzMzg5MDg4NDczLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74881,75012,74891,81210,76700,73785],"class_list":["post-480870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitfinex","tag-derivatives","tag-ethereum","tag-ethereum-options","tag-makerdao","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/480870","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=480870"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/480870\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/480871"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=480870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=480870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=480870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}