Ether (ETH) has been struggling with the $1,680 resistance since January 20. However, the ascending triangle pattern and the improvement in investor sentiment in ETH derivatives provide hope that the price of Ether could reach $1,800 or higher by the end of February. This, of course, depends on how the price of Ether behaves when it reaches the pattern deadline in the middle of February.
On the one hand, traders are relieved that Ether is trading up 33% year-to-date, but the repeated failure to break the $1,680 resistance coupled with the negative news flow could give the power to cancel the bullish triangle pattern.
According to a January 30 report from Axios, the New York State Department of Financial Services is reportedly investigating the Gemini cryptocurrency exchange over claims it made about assets in its Get credit program. The allegations follow reports that some Gemini Earn users believed their assets were protected by the Federal Deposit Insurance Corporation (FDIC).
On January 12, the US Securities and Exchange Commission charged the Gemini exchange with offering unregistered securities through Earn. Additionally, Gemini founder Cameron Winklevoss has claimed that Genesis and DCG owe $900 million to Gemini clients.
Several United States senators have reportedly written a letter demanding answers from Silvergate Bank, according to a January 31 Bloomberg report. The policy makers were not satisfied with the bank’s previous answer regarding its alleged role in handling the funds of FTX users. Silvergate reportedly cited a ban on disclosing “confidential supervisory information.”
On the bright side, Ethereum Foundation developer Parithosh Jayanthi announced that the “Zhejiang” public testnet will be launched on February 1. The implementation will allow the withdrawal of staked Ether in a test environment so that validators can anticipate the changes proposed for the Shanghai hard fork. .
Let’s take a look at the Ether derivatives data to see if pro traders are frustrated with the recent price rejection at the $1,680 level.
The ETH futures premium has failed to enter FOMO territory
Retail traders typically avoid quarter futures because of the price difference from the spot market. Meanwhile, professional traders prefer these instruments because they avoid fluctuations in the funding rate in futures contracts.
The annual two-month futures premium should trade between 4% and 8% in a healthy market to cover the associated costs and risks. When futures trade at a discount to the regular spot market, it shows a lack of confidence from leveraged buyers, which is a bearish indicator.
The chart above shows that traders using futures contracts have failed to break the 4% neutral-to-bullish threshold. Still, the current 3.5% premium represents a moderate improvement in sentiment compared to two weeks ago, but that doesn’t mean traders expect immediate positive price action.
Therefore, traders should analyze the Ether options market to understand how whales and market makers value the possible future price movements.
Options traders are comfortable with downside risk
The 25% delta skew is a sign that indicates when market makers and arbitrage tables are overcharging for upside or downside protection.
In a bear market, option investors give a higher probability of a price dump, causing the skew indicator to rise above 10%. On the other hand, bullish markets tend to push the tilt indicator below -10%, which means bearish options are reduced.
Skew delta has stabilized near 0% in the past two weeks, signaling that Ether options traders have a neutral sentiment. That’s especially interesting since ETH gained 10% on January 20 – showing the pro traders were the price of the rise and fall of the risk.
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In the end, both options and futures markets show whales and market makers are not comfortable with increasing leverage longs, but at the same time, do not worry that $1,570 up support channel break.
Traders will be watching to see if Ether bulls can keep the price in a bullish triangle formation for the next two weeks, but if the macroeconomic environment allows, ETH derivatives show a potential rally towards $1,800.
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