Crypto Updates

Ethereum bears have the upper hand according to derivatives data, but for how long?

Ethereum bears have the upper hand according to derivatives data, but for how long?

Ether (ETH) price experienced an 11.9% decline from Nov. 20 to Nov. 22, bottoming at $1,074 — the lowest level seen since July. Currently, investors have reason to be concerned after crypto lending company Genesis reportedly faced difficulties raising money, triggering rumors of insolvency on Nov. 21. 

However, a spokesperson for Genesis told Cointelegraph that there were no plans for imminent bankruptcy because the company continues to hold discussions with its creditors.

Unease about the centralization of decentralized finance (DeFi) surfaced after Uniswap Labs changed the privacy policy on Nov. 17, revealing that it collects publicly-available blockchain data, users’ browser information, operating systems data and interactions with its service providers.

Adding to the fracas, the hacker behind the FTX exchange theft of $447 million has been spotted moving their Ether funds. On Nov. 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 might be suppressing Ether’s price to profit using leveraged short bets. The rumor was raised by @kundunsan on Nov. 15, even though the Twitter post did not gain exposure.

Let’s look at Ether derivatives data to understand if the worsening market conditions have impacted crypto investors’ sentiment.

Pro traders have been in panic mode since Nov. 10

Retail traders usually avoid quarterly futures due to their price difference from spot markets, but they are professional traders’ preferred instruments because they prevent the fluctuation of funding rates that often occurs in a perpetual futures contract.

Ether 2-month futures annualized premium. Source:

The three-month futures annualized premium should trade between +4% to +8% in healthy markets to cover costs and associated risks. The chart above shows that derivatives traders have been bearish since Nov. 10 since the Ether futures premium was negative.

Currently there is backwardation in the contracts and this situation is atypical and usually deemed bearish. The metric did not improve after ETH rallied 5% on Nov. 22, reflecting professional traders’ unwillingness to add leveraged long (bull)…

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