Ethereum and Bitcoin are continuing their gains, and with all the green things are looking good. But even though ETH is up 35% in the past 10 days, its tech specs look weak. There is some good news like the introduction of EIP-1559 that will lower transaction fees for the currency. It will also increase overall usage. Even the price movement of BTC is also driving ETH higher, but its profits have been smaller 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 terms, we should know that we see rallies when markets get greedy and when we are afraid we see price falls. But how is the market sentiment to be understood? For this we have the 25% delta skew indicator. When the markets are bullish and there are more buy calls this indicator becomes negative. On the other hand, when there are more sales calls, this indicator becomes positive.
The indicator somewhere in the range of -10% – + 10% is considered a neutral area. And in the case of the options market, it’s currently at -4%, which is a bit bullish but still very neutral. Just think of the fact that even after almost 10 days of regular green candles, the market sentiment for Ethereum was not very strong. It is nowhere in the region of greed that we expect, and we are still very much in the realm of fear. And until that changes, it will be difficult to see a strong rally.
The future markets are not bullish either
Yes that’s right; even in the futures markets, the metrics are not strong. In a bullish market, 3-month futures options often trade at a premium of 6-14%, but even after the recent rally; the prices are lower. There is no greed, and the indicators react accordingly. If we don’t see a strong premium here it will be difficult to stay for this rally. Ethereum has a lot of potential and the fact that it doesn’t look very bullish is alarming but will change pretty soon I think.
What do you think of Ethereum’s weak momentum as the indicators suggest? And do you think that will change soon? Let us know in the comments below. If you found our content informative, like it and share it with your friends.
Also read: Finland plans to sell seized Bitcoin worth $ 80 million.