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The past six months should have been very favorable for the price of Ether (ETH), especially after the project’s biggest ever upgrade in September 2022. 10% against Bitcoin (BTC).

Bitfinex ETH/BTC price ratio, 2 days.Source: Trading View

The 0.068 ETH/BTC price ratio has been holding since October 2022 and broke support on March 15th. According to ETH futures and options data, traders currently have little confidence in making leveraged bets.

But first, we should consider why the price of Ether was expected to rise over the past six months. On September 15, 2022, a Merge, a hard fork that switched the network to a Proof of Stake consensus mechanism, occurred. This allowed for much lower and even negative coin issuance rates. But more importantly, this change paved the way for parallelism aimed at bringing scalability and reduced transaction costs to the Ethereum network.

The Shapella hard fork, expected to take place on mainnet in April, is the next step in the Ethereum network upgrade. With this change, validators who have previously deposited 32 ETH will be able to enter the staking mechanism and withdraw some or all of it. While this development is generally positive as it gives validators more flexibility, unlocking a potential 1.76 million ETH is a negative result.

However, there is an upper limit to the number of validators that can be terminated. Therefore, the maximum unstake in a day is 70,000 ETH. Additionally, after finishing the verification process, you can choose either lido, rocket pools, or decentralized finance (DeFi) applications as your yield mechanism. These coins will not necessarily be sold on the market.

To understand if the recent drop below the 0.068 ETH/BTC ratio is affecting investor sentiment, let’s take a look at the Ether derivatives data.

ETH futures recovered from panic

In a healthy market, the annualized 3-month futures premium should trade between 5% and 10% to cover the associated costs and risks. However, when a contract trades at a discount (“backwardation”) relative to the traditional spot market, it indicates a trader’s lack of confidence and is considered a bearish indicator.

Annualized Premium for 2-Month Ether Futures.Source: Levitas

Derivatives traders became apprehensive about holding leveraged long (bullish) positions as the Ether futures premium fell below zero on March 11, down from 3.5% just two days earlier. More importantly, his current premium of 2.5% remains modest and far from his neutral-to-bullish threshold of 5%.

That said, reduced demand for leveraged longs (bullish) does not necessarily mean expectations for negative price action. As a result, traders should examine the Ether options market to understand how whales and market makers assess potential future price movements.

Related: Why Lark Davis Fights The Social Media Storm And Why He’s An ETH Bull — Hall of Flame

ETH Options Confirm Lack of Risk Appetite

A 25% delta skew is a clear sign that market makers and arbitrage desks are overcharging for upside or downside protection. In a bear market, the skew indicator exceeds 8% as options investors set higher odds for a price decline. On the other hand, in a bullish market, the skew indicator tends to be below -8%, implying less demand for bearish put options.

Ether 30 Day Option 25% Delta Skew: Source: Laevitas

On March 3rd, delta skew crossed the bearish 8% threshold. This shows that there is a lot of stress among professional traders. Fear levels peaked on March 10, with Ether prices plummeting to his 56-day low of $1,370, while Ethereum prices plummeted to his lowest on March 12. has rebounded above $1,480.

Surprisingly, on March 12, the 25% delta skew index continued to climb, reaching its highest level of skepticism since November 2022. This happened just hours before the price of Ether rose by his 20% in his 48 hours. This explains why ETH traders short futures contracts. faced Liquidation of $507 million.

Currently, the 3% delta skew indicator shows balanced demand for call and put options on ETH. Combined with a neutral stance on Ethereum futures premiums, the derivatives market shows that professional traders are hesitant to place bullish or bearish bets. Unfortunately, the ETH derivatives indicator does not favor traders who expect Ether to regain his 0.068 level against Bitcoin in the short term.

The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views or opinions of Cointelegraph.