Originally published on: January 11, 2022
Ethereum has been on a wild ride lately, with its price hitting highs of $4,870 in November and December before plummeting to lows of $2,900 in January. This rollercoaster has left traders feeling a mix of emotions as they try to navigate the volatile market.
Some attribute Ethereum’s recent downturn to factors like the US Federal Reserve’s potential monetary policies and political turmoil in countries like Kazakhstan. However, there are other key events at play, such as China’s digital yuan gaining popularity and the launch of a pilot version of the nation’s central bank digital currency.
One important indicator that traders should pay attention to is the futures contracts premium, which measures the difference between longer-term futures contracts and current spot market levels. A high premium indicates bullish sentiment, while a low or negative premium signals bearishness.
Similarly, the options market can provide valuable insights into trader sentiment. The 25% delta skew compares call and put options to determine whether fear or greed is prevailing in the market. A positive skew indicates fear, while a negative skew suggests greed.
Recent data shows that while futures markets are expressing some discontent, options traders are becoming more confident in Ethereum’s price. The current price of $3,200 still reflects a recent drop, leaving traders uncertain about the future direction of the market.
As the market continues to fluctuate, traders are advised to conduct their own research and stay informed about the latest developments to make informed investment decisions. Subscribe to our newsletter for more in-depth analysis and insights into the crypto market landscape.
