The price of Ether (ETH) saw a drop of 11.9% from November 20 to 22, bottoming out at $1,074, the lowest level seen since July. Investors currently have reason to be concerned after crypto lending firm Genesis reportedly faced difficulties raising money, sparking insolvency rumors on Nov. 21.
However, a Genesis spokesperson told Cointelegraph that there were no plans for an imminent bankruptcy because the company is still in talks with its creditors.
Concern over the centralization of decentralized finance (DeFi) arose after Uniswap Labs changed its privacy policy on November 17, revealing that it collects publicly available blockchain data, user browser information, operating system data, and interactions. with your service providers.
In addition to the fight, the hacker behind the theft of $447 million on the FTX exchange has been seen moving his Ether funds. On November 20, the attacker transferred 50,000 ETH to a separate wallet and converted it to Bitcoin using two renBTC bridges.
Traders fear that the hacker may be suppressing the price of Ether to make a profit using leveraged short bets. The rumor was raised by @kundunsan on November 15, despite the Twitter post not gaining exposure.
Unpopular opinion:
SBF is the hacker and already shorted market heavy and collecting all stolen assets into USDETH
Finally he’ll dump huge ETH bag to more profit his short positions.
He’s still rubbing us, unbelievable. https://t.co/CYJmOSgwXO—Dervish (@kundunsan) November 15, 2022
Let’s look at Ether derivatives data to understand if worsening market conditions have affected crypto investor sentiment.
Professional traders have been in panic mode since November 10
Quarterly futures are often avoided by retail traders because of their price difference from spot markets, but they are the instruments of choice for professional traders because they avoid the fluctuation in funding rates that often occurs in a futures contract. perpetual.
The annualized 3-month futures premium should trade between +4% and +8% in healthy markets to cover costs and associated risks. The chart above shows that derivatives traders have been bearish since November 10, as the Ether futures premium was negative.
There is currently a backwardation in the contracts and this situation is atypical and is usually considered bearish. The metric did not improve after ETH rallied 5% on Nov. 22, reflecting the unwillingness of professional traders to add leveraged long (bullish) positions.
Traders should also analyze Ether options markets to exclude externalities specific to the futures instrument.
Options traders fear further dips
The 25% delta 25% slope is a telltale sign when market makers and arbitrage desks are overcharging for upside or downside protection.
In bear markets, option investors place higher odds of a price dump, causing the slope indicator to rise above 10%. On the other hand, bullish markets tend to drive the slope indicator below -10%, which means bearish put options are discounted.
The delta slope has been above the 10% threshold since Nov. 9, indicating that options traders were less inclined to offer downside protection. The situation worsened in the following days when the indicator of the inclination of the delta exceeded +20%.
The 60-day delta slope is currently +23%, so whales and market makers are pricing in higher odds of price dumps for Ether. Consequently, derivatives data shows low confidence just as Ether struggles to hold the $1,100 support.
Based on the data, ether bulls should not throw in the towel just yet because these metrics tend to be lagging. The panic that followed the FTX bankruptcy and subsequent Genesis liquidity problems could quickly dissipate if public reserve tests of exchanges and institutional investors adding exposure to Bitcoin during the dip are seen as positive by market participants. .
That being said, right now Ether bears still have the upper hand according to ETH derivatives metrics.
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