Ethereum and Bitcoin continue their gains, and things do look good with everything green. But even though ETH has risen 35% in the last 10 days, its technicals look weak. There is some good news like the EIP-1559 launch that will reduce transaction fees for the currency. It will also increase the usage overall. Even the price movement of BTC is pushing ETH up too, but its gains have been less as compared to BTC. Overall, Ethereum doesn’t look very bullish due to the options and future markets.
What’s wrong with the options market?
To understand this in simple words, we should know that when markets become greedy, we see rallies, and when it is in fear, we see price drops. But how to understand what is the market sentiment? For this, we have the 25% delta skew indicator. When markets are bullish and there are more buy calls, then this indicator becomes negative. On the other hand, when there are more sell calls, then this indicator becomes positive.
The indicator anywhere in the range of -10% – +10% is considered as neutral territory. And in the case of the options market, it is currently at -4%, which is a little bullish but still very much neutral. Just think about the fact that even after seeing almost 10 days of regular green candles, the market sentiment for Ethereum hasn’t been very strong. It is nowhere in the greed region we are expecting, and we are still very much in the fear territory. And until this changes, it will be difficult to see any strong rally.
Future markets aren’t bullish either
Yes, that is right; even in the case of the futures markets, the metrics aren’t strong. In a bullish market, 3-month future options often trade at a premium of 6-14% but even after the recent rally; the rates are below that. There is no greed, and the indicators are reacting accordingly. If we do not see a strong premium here, it will be difficult for this rally to sustain. Ethereum has a lot of potential and the fact that it doesn’t look very bullish is alarming but will change pretty soon, I guess.
What are your thoughts on the weak momentum of Ethereum, as the indicators suggest? And do you think it will change soon? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.