Voorhees has been bullish on Ethereum for a long time, with ether currently trading at $269. Other traders are picking up on the momentum and buying into it as well.
The “ethereum price why is it dropping” is a question that many people are asking. Data from the Bitfinex exchange shows that pro traders are currently more bullish on Ethereum than Bitcoin.
Most traders have noted that the price of Ether (ETH) has been significantly outperforming Bitcoin (BTC) for months, and the ETH/BTC ratio has soared more than 230 percent in 2021, reaching a new high of 0.089 BTC on December 9.
Coinbase’s ETH/BTC pair. TradingView is the source of this information.
To put things in perspective, Ether presently has a market valuation of $490 billion, which is 54% of Bitcoin’s $903 billion. With this ratio ending 2020 at just 15%, it’s reasonable to assume that some ‘flippening’ has happened. It’s still a long way from the Ethereum-maximalists’ expectations, but it’s still a decent run.
Analysts should examine the market structure of each coin independently rather than studying the reason for the move or, even worse, forecasting the conclusion based on some speculative assumptions.
Is the futures market premium on both currencies seeing a similar pattern, and how does the pro traders’ long-to-short ratio compare? These are the most important parameters for determining if a movement can sustain itself.
The futures premium is in your advantage. Ether
Quarterly futures are the favourite products of whales and arbitrage desks, but they may seem confusing to regular traders due to their settlement date and price differential from spot markets. The absence of a variable financing rate is the most apparent benefit of these quarterly contracts.
These fixed-month contracts often trade somewhat above spot market values, suggesting that sellers are demanding more money in order to defer settlement for a longer period of time. As a result, in healthy markets, futures should trade at a 5 percent to 15% annualized premium. This is known as “contango,” and it is not exclusive to cryptocurrency markets.
The foundation for Bitcoin and Ether futures. Laevitas.ch is the source of this information.
We can observe that Bitcoin futures trade at an average annualized premium of 2.6 percent for March 2022 and 4.4 percent for June 2022 after comparing both plots. This compared to 2.9 percent and 5% for Ether and Bitcoin, respectively. As a consequence, it’s evident that whales and arbitrage desks are seeking a higher Ether premium, which is a positive sign.
The long-to-short ratio of Bitcoin fell.
Investors can follow the top traders’ long-to-short ratio at prominent crypto exchanges to get a good idea of how professional traders are positioned. By combining data from several marketplaces, this statistic gives a more comprehensive picture of traders’ effective net position.
Because there are many methods to calculate customers’ net exposure, exchanges collect data on top traders in different ways. As a result, any comparison across providers should be based on % changes rather than absolute values.
Long-to-short ratio among Bitcoin’s best traders. Coinglass is the source of this information.
The average long-to-short ratio for prominent Bitcoin traders is presently 1.21, down from 1.39 on December 5. This indicates that purchasers (longs) cut their exposure by 24% when compared to the 1.59 number from two weeks earlier. The absolute quantity, once again, is less important than the general shift over time.
Long-to-short ratio among Ether’s top traders. Coinglass is the source of this information.
Meanwhile, since Dec. 5, Ether whales and arbitrage desks have shown a favorable attitude shift when the long-to-short ratio increased to 1.16 from 1.0. When comparing data from November 25, top Ether traders’ long-to-short ratio has decreased by 20% from 1.43.
Ether traders are more confident than Bitcoin traders, according to data.
Because Ether now has a higher futures basis rate, current derivatives data supports it. Furthermore, since Oct. 5, the top traders’ long-to-short ratio has improved, signaling confidence at a critical moment when the price of ETH is down 16 percent from its all-time high of $4,870.
Bitcoin investors may be losing faith, as the price has fallen 31% from its all-time high of $69,000 set on Nov. 10. It’s impossible to tell if something is a cause or an effect. Despite this, Ether seems to have enough momentum to continue outperforming based on the futures premium and long-to-short statistics.
The author’s thoughts and opinions are purely his or her own and do not necessarily represent those of Cointelegraph. Every investing and trading decision has some level of risk. When making a choice, you should do your own research.
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The “ethereum news 2020” is a data that shows pro traders are currently more bullish on Ethereum than Bitcoin.
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