Ethereum Price Analysis

Three key metrics indicate that the price of Ethereum is moving towards $ 2,000

Various data show that investors are optimistic about the upward trend in the price of Ethereum after a 36% correction to $ 1,300, and predict that the digital currency will rise to 2,000.

to the the report Coin Telegraph, the price of Ethereum went from February 20 (March 2) to the peak of 2015 dollars. This has led to a sharp increase in optimism about this digital currency in several indicators. While this increase in optimism can be attributed to Ethereum’s 176% growth since the beginning of 2021, its importance among investors should not be overlooked.

One of the main reasons for the positive sentiment in the Ethereum market is the supply of CME‌ futures contracts for Ethereum. Grayscale Ethereum Investment Fund, on the other hand, had $ 6.3 billion in assets. In addition, decentralized financial market (DeFi) market turmoil continues to rise, with more than $ 21 billion in ether currently being invested in these platforms.

Index of fear and greed

Index of fear and greed
Index of fear and greed

Currently, the fear and greed index is in the range of 93, which indicates the “extreme greed” of traders. Many traders use this index as a signal for trend reversals; That is, investors consider this criterion as a buying opportunity, assuming that investor greed is an upward factor; But it should not be forgotten that in most cases, the intense greed of investors indicates an imminent correction.

Unlike small traders, whose numbers are growing by the day, experienced market makers and whales are skeptical that Ethereum will reach $ 2,000. Aside from the fact that the 36% price correction seems reasonable after the price peak was recorded, this correction was intensified by the liquidation of investors.

Total volume of Ethereum futures contracts
Total volume of Ethereum futures contracts

Between February 19 and 23 (March 1 to 13), $ 2 billion in futures contracts were sold, representing 28% of open contracts; For this reason, it can be said that this issue may act as a factor in weakening the bullish sentiment in the market. On the other hand, the index of fear and greed has shown the same issue.

Surprisingly, none of this happened in the Ethereum derivatives markets, and both futures premiums and skewness (deviation from normal distribution) remained bullish.

Premium is in the healthy range

By calculating the difference between current and future markets, the trader can measure the up or down of the market.

On a quarterly basis, the premium for smart contracts is usually 10% or more compared to regular instant markets. Whenever this percentage decreases or reaches a negative range, it will indicate negative feelings in the market. This is called a “reversal” and indicates that the market is moving in a downward direction.

Ethereum chart

The chart above shows that the peak of this index was February 20 and was in the range of 30%. Ethereum prices hit a new high at that time. It is worth noting that during the correction of the price of Ethereum and the fall to $ 1,300, this index remained above the range of 16%. These data show that professional investors have a positive attitude towards the potential increase in Ethereum prices.

Skewness of option contracts is bullish

In the discussion of options contracts, the 25% skew delta is a determining factor. This index examines buying options (call) and selling options (put) together.

This criterion will be negative when the premium of the selling options is higher than the buying options with the same risk. Negative skewness is an upward sign. On the other hand, if the market is declining, this criterion will enter the positive range.

Over the past month, the skewed delta has not entered the positive range; Therefore, there is no evidence that market traders have a downside view.

Skew chart

This data is promising; Given that Ethereum has seen a sharp increase in sales pressure, but futures and options trading were still in the uptrend, it can be concluded that these data are promising.

Gradually, the further Ether moves away from its $ 1,300 floor, the greater the confidence of investors that the uptrend will not break.


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button