Ether (ETH) has been stuck between $1,170 and $1,350 from Nov. 10 to Nov. 15, representing a relatively tight 15% range. During this time, investors are still digesting the negative impact of the FTX exchange’s November 11 chapter bankruptcy filing.
Meanwhile, the total volume of the Ether market was 57% higher than the previous week, at $4.04 billion a day. This data is even more relevant considering the collapse of Alameda Research, the arbitrage and market making firm controlled by FTX founder Sam Bankman-Fried.
On a monthly basis, Ether’s current level of $1,250 is down a modest 4.4%, so traders can hardly blame FTX and Alameda Research for the 74% drop from the all-time high of $4,811 reached in November. of 2021.
While contagion risks have caused investors to start withdrawing funds from centralized exchanges, the move has led to increased decentralized exchange (DEX) activity. Uniswap, 1inch Network, and SushiSwap all saw a 22% increase in the number of active addresses since November 8.
Let’s take a look at derivatives metrics to better understand where professional traders stand in current market conditions.
Margin markets show no signs of pressure
Margin trading allows investors to borrow cryptocurrencies to leverage their trading position, potentially increasing their profits. For example, one can buy Ether by borrowing Tether (USDT), thus increasing their exposure to cryptocurrencies. On the other hand, borrowing Ether can only be used to short or bet on a price decline.
Unlike futures contracts, the balance between longs and shorts on margin is not necessarily even. When the margin lending ratio is high, it indicates that the market is bullish; Otherwise, a low loan ratio signals that the market is bearish.
The chart above shows that investor morale peaked on November 13, when the ratio reached 5.7, the highest in two months. However, from that moment on, OKX traders presented less demand for bets due to the upward trend in prices, as the indicator fell to the current level of 4.0.
Even so, the current lending ratio is trending higher in absolute terms, favoring stablecoin lending by a wide margin. Notably, overall sentiment has improved since November 8, as traders increased demand for stablecoin margin lending.
Longs to Shorts Data Shows Lower Demand for Leverage Longs
Professional traders’ net long to short ratio excludes externalities that might have affected only margin markets. By aggregating positions in spot, perpetual, and quarterly futures contracts, analysts can better understand whether professional traders are bullish or bearish.
From time to time there are methodological discrepancies between different exchanges, so viewers should watch the changes rather than the absolute numbers.
The long-short ratio on Huobi stood at 0.98 between Nov. 8-15, indicating a balanced situation between leveraged buyers and sellers. On the other hand, Binance traders initially faced a deep contraction in demand for long positions, but the move muted entirely as buying activity dominated from November 11.
On OKX, the metric plunged from 1.30 on Nov. 8 to the current 0.81, favoring shorts. Therefore, based on the position ratio, professional traders significantly reduced their long positions until November 10, but then proceeded to increase them.
From the point of view of derivatives analysis, neither the futures nor the margin markets show excess demand for short positions. If panicky sentiment had prevailed, one would expect worsening conditions in Ether lending indicators and long and short positions.
Consequently, the bulls are in control, as traders are not comfortable taking short positions on ETH below $1,300.
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