The prices of Ethereum and bitcoin, ETH BTC as most cryptocurrency traders call it, have been going through their fair share of price fluctuations. But Ethereum professional traders have remained resolute, not succumbing to the bullish market.
Before the bullish market of early September that saw bitcoin price crash heavily following the announcement of El Salvador officially accepting bitcoin as a currency for the exchange of value, Ethereum had been able to withstand multiple Ethereum’s OVERSOLD, and deal with a probable Liquidity Crunch. Ethereum trading has remained relatively stable in a bullish market.
An ‘Oversold’ happens when there are more sellers than buyers, indicating the price of a cryptocurrency is trading for a price lower than its value.
For example, on an exchange platform such as Redot, when there are more people selling Ethereum, the price of Ethereum will fall. Oversold obeys the classic Demand and supply laws: When there are more supplies than there is demand in a trading platform or market, the price will fall.
The $3,000 mark, which Ethereum has been holding for a while after the market rallied back to life in late June, has been maintained despite BTC being unable to retain its $50,000 price.
In late June, the price of Ethereum hit an all-time high of more than $4,0000 before it stabilized around the $3,800 mark.
Leading up to August, the price of Ethereum rallied back to $3,000, defying the plethora of news that somehow threatened to bring the price down. However, Ethereum traders have been very consistent, their bearish attitude sustaining the price of Ethereum.
Cointelegraph, a reliable cryptocurrency, and Ethereum news website, revealed, in late August, that Ethereum traders, according to the derivatives market, have not succumbed to the bullish positions – and liquidity crunch of Ethereum – the market seemed to be heading towards.
The general cryptocurrency market had shown signs of bullishness, but Ethereum traders have been confident about the cryptocurrency’s price. And there are justifiable reasons for their confidence in Ethereum’s price.
HOW REGULATORY PRESSURE HAS HAD NO EFFECT ON HOW CONFIDENT ETHEREUM TRADERS ARE
When it comes to the prices of Ethereum, bitcoin, and every other cryptocurrency, news related to the currency’s usage and trade affects how traders react in the market. If there is favorable news, the market witnesses a positive trend; but if the news is negative, then the market reveals a negative response.
However, when Dawn Stump, a commissioner at the Commodity Futures Trading Commission (CFTC), said that “A trading platform that offers derivatives on digital assets to U.S. persons without registering, or in violation of CFTC trading rules, is subject to the CFTC’s enforcement authority.”
One of the four to six commissioners in the CFTC, Dawn Stump’s words would have had a negative effect on the market trends, especially Ethereum and bitcoin, but the reaction of Ethereum on the market has been different from bitcoins in the market.
NFT BOOM ALSO MAKING ETHEREUM PROFESSIONAL TRADERS MORE CONFIDENT
It is imperative to note that Ethereum traders are aware of the growing demand for NFT, which is the new bride in cryptocurrency, and how most NFTs are minted on the Ethereum blockchain.
NFTs are the new cool in blockchain technology. As more creators and artists leverage the financial rewards in NFTs, Ethereum’s importance and usage grow. And the price of bitcoin does not rise in the same way Ethereum’s rises.
During the week that Dawn Stump made the above statement, Visa, the payment processing giants worth around $500 million, obtained $150,000 worth of NFT from Cryptopunk. According to the payment processing giants, they were jumping into NFTs feet first, and that the purchase of their $150,000 worth of NFT was the beginning.
News such as Visa buying NFTs emboldens New Ethereum traders to remain optimistic about the price of Ethereum sustaining its ceiling price and not succumbing to bullish trends.
It is also important to note that Opensea, the biggest NFT marketplace, which runs on the Ethereum blockchain, processed more than $1 billion worth of transactions in 30 days. These staggering numbers have built confidence in New Ethereum traders.
TRADERS ARE CONFIDENT IN ETHEREUM
The growing confidence of New Ethereum traders in the price of the cryptocurrency to stay strong even in the face of a bullish market is not without reason. The futures and derivatives data analysis show that Ethereum professional traders have a right to be optimistic because the future rate and futures premium is doing reasonably well. Ethereum will beat bitcoin to an all-time high price.
The futures premium measures the difference between long-term futures contracts and the current spot levels.
Two important terms: Contango and Backwardation, are important in understanding why New Ethereum traders are confident in Ethereum’s rally and how fast Ethereum will beat Bitcoin to reach an all-time high price.
Contango is a situation where the spot price is lower than the futures price; futures contracts are trading at a premium to the spot price. Backwardation, on the other hand, is when the spot price is lower than the futures price.
In healthy markets, the annualized futures premium is between 5% to 15%. Last month, however, the annualized premium was at 11% but it has not shown much progress from the previous month.
Traders’ confidence in the ETH and BTC market so far can also be viewed from the ‘greedy’ lenses. These Ethereum traders who, despite the signs of bitcoin suffering a slump in price, have remained confident in Ethereum’s price not falling too far off the floor price, might be looking too much at the options market and the delta slew it has shown over the past months. The 25% Delta slew and the Derivatives market have empowered the ‘greed’ in traders.
The 25% delta slew compares the call and put option. When the put option premium is higher than the call option, then there is bound to be fear in the market; and when the opposite happens, traders are confident.
When the 25% delta slew is in the positive area, the market is bearish, and when the delta slew is in the negative area, the market is bullish.
In a neutral market, the readings are between 8% positive and 8% negative. When the delta slew is neutral, traders are likely to stay hopeful for a positive swing. But the recent trends show the staggering confidence Ethereum traders have at the price.