Ether (ETH) has fallen by 25% in just a month, and even the recent upgrade to Proof-of-Stake (PoS) consensus on the Ropsten testnet could not affect the price of the altcoin.

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The merger is intended to address energy use issues and pave the way for higher transaction performance, but an actual full transition for the Ethereum network is not expected before the end of the year. Ethereum developer Paritosh Jayanti also noted that there were some bugs in the PoS implementation, but they should be fixed in the coming weeks.

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Luckily for Ethereum, its two main competitors have recently run into problems of their own. The Solana network experienced its fifth outage in 2022 after no new blocks were produced for 4 hours on June 1st. Every dapp was halted until the validators were able to resolve the issue and re-sync the network.

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Most recently, on June 7, Binance’s native BNB token fell 7% following the news that the US Securities and Exchange Commission announced it was investigating an initial coin offering (ICO) in 2017. According to Bloomberg, at least one US resident claimed to have been involved in an ICO, which could be pivotal to the SEC case.

Regulatory uncertainty may be partly responsible for the sharp Ether correction. On June 6, the Hong Kong Securities and Futures Commission (SFC) issued a warning about the investment risks of non-fungible tokens. The regulator has highlighted non-transparent sector pricing, illiquid markets and fraud.

Option traders are still extremely risk averse

Traders should look at data from the Ethereum derivatives markets to understand how larger traders are positioning themselves. A skewed delta of 25% is a telling sign whenever whales and arbitrage bureaus overprice for up or down protection.

If these traders fear a collapse in Ethereum prices, the skew indicator will rise above 10%. On the other hand, generalized arousal reflects a negative 10 percent asymmetry. That is why this metric is known as the fear and greed metric of professional traders.

30-day Ether options with a delta skew of 25%: Source: Laevitas.ch

The skew indicator has been above 10% since May 22nd and it recently peaked at 20% on June 3rd. These levels signal extreme fear on the part of options traders, and despite a modest improvement, the current delta skew of 17% shows that the whales and arbitrage bureaus are unwilling. take the risk of loss.

Long and Short Data Shows Several Positives

The net long-to-short ratio of leading traders excludes external factors that could have solely affected the options markets. By analyzing the positions of these top clients on the spot, perpetual and quarterly futures contracts, one can better understand whether professional traders tend to be bullish or bearish.

Sometimes methodological discrepancies arise between different exchanges, so viewers should follow the changes, not the absolute numbers.

The ratio of long and short Ethereum positions of the leading traders of exchanges. Source: Coinglass

Even though Ethereum struggled to hold on to $1,800 as support, professional traders did not change their positions between June 5 and 9, according to the Long/Short indicator.

Binance saw a moderate decline in the long-to-short ratio as the indicator moved from 0.99 to the current 0.96 in four days. So these traders increased their bearish bets a bit.

Huobi data shows a similar picture: on June 9, the indicator moved from 1.02 to 0.98, which was a small change in favor of short positions. On the OKX exchange, the indicator fluctuated sharply during the period, but remained almost unchanged at 1.35.

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Mixed derivatives data gives bulls hope

In general, there were no significant changes in the positions of the whales and market makers, despite the fact that on June 6, Ether failed to overcome the resistance of $1,900.

On the one hand, options traders fear a deeper correction in the Ether price, but at the same time, futures market players are not in the mood to increase bearish bets.

This reading is likely a “glass half full” scenario as the reluctance of leading traders to go short below $1,900 could potentially create a support level.

The views and opinions expressed here are solely those of author and do not necessarily represent the views of Cryptooshala. Every investment and trading move involves risk. You should do your own research when making a decision.