Ethereum approaches a new ATH, but derivatives data reflects mixed emotions
Ethereum price appears en-route to a new all-time high, but data shows retail and pro investors are slightly skeptical about the current rally.
Today Ether (ETH) price briefly touched $4,760, exciting investors and reminding the world that the altcoin is a mere 2.2% below the $4,870 all-time high reached 20 days ago. While the spot price action might be intriguing, let’s see what’s happening in Ether’s derivatives markets.
While it is possible to draw a descending channel that shows support at $3,960, today’s 5.4% positive move seems decoupled from Bitcoin’s (BTC) negative performance.
Earlier today, commodities and stocks took a hit after the U.S. Federal Reserve acknowledged that inflation is more than just a “transitory” trend and Fed chair Jerome Powell said that the bank’s relaxed money policies could end sooner than anticipated.
To understand how confident traders are about Ether’s price recovery, one should analyze the perpetual contracts futures data. This instrument is the retail traders’ preferred market because its price tends to track the regular spot markets.
In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Consequently, exchanges will charge a funding rate to whichever side demands more leverage, and this fee is paid to the opposing side.
Neutral markets tend to display a 0% to 0.03% positive funding rate which is equivalent to 0.6% per week. This indicates that longs are the ones paying and data shows retail traders have been mostly neutral since Nov. 4 and the last move above 0.07% happened on Oct. 21.