Ether has been trading in a tight range between $1,170 and $1,350 from November 10 to November 15. Investors have been digesting the negative impact of the FTX exchange’s November 11 Chapter 11 bankruptcy filing throughout this time.
Ether’s market value increased by 57% this week. This information is especially important because FTX’s founder, Sam Bankman-Fried, lost his company, Alameda Research, recently.
Ether is falling in value by 4.4% each month, but this doesn’t mean that people who trade it are to blame. The price of Ether is falling from its highest point in November of last year, but this still leaves it worth $1,250.
Some people are scared of being infected with a virus, so they’ve been moving their money out of centralized exchanges and into decentralized exchanges. This has caused the number of decentralized exchanges to increase. Since November 8, Uniswap, 1inch Network, and SushiSwap have seen a significant increase in the number of people using their services.
To better understand how professional traders are positioned in the current market conditions, let’s look at derivatives metrics.
There are no indications that the margin markets are in distress.
Cryptocurrency margin trading allows investors to borrow digital assets to increase their trading position, potentially increasing their returns. One can buy Ether by borrowing Tethers, thus increasing their crypto exposure. On the other hand, borrowing Ether can only be used to short it or bet on a price decrease.
The balance between margin longs and shorts is not always matched. When the margin lending ratio is high, this suggests that the market is bullish, while a low lending ratio indicates that the market is bearish.
The chart above shows that investors’ morale reached a high on November 13, when the ratio reached 5.7. However, as the indicator fell to the current 4.0 level, traders decreased their demand for bets on the price uptrend.
Despite the current lending ratio being moderately bullish, stablecoin borrowing still dominates in absolute terms. It is worth noting that the sentiment among traders has improved since November 8, as they have increased demand for margin longs using stablecoins.
Short-term data shows that demand for long positions has decreased.
The top traders’ net long-to-short ratio excludes any externalities that may have only impacted the margin markets. Analysts can aggregate the positions on spot contracts to get a better idea of whether professional traders are bullish or bearish.
There are occasional methodological discrepancies between different exchanges, so viewers should be cautious about changes instead of relying on absolute figures.
The number of long positions (buying) was about the same as the number of short positions (selling) during this time period. This means that there was a fair balance between buyers and sellers. On one side, the demand for long positions (buying Bitcoin) decreased, but this was overshadowed by the large amount of buying that occurred starting from November 11th.
At the OKX exchange, the value of a metric plummeted from 1.30 on November 8 to the present 0.81, favoring those short the metric. Based on the indicator, the top traders decreased their long positions starting on November 10, but then increased their long positions again afterwards.
From a derivatives analysis standpoint, it appears that neither futures nor margin markets display an excessive demand for shorts. If the sentiment based on panic prevailed, one would expect worsening conditions on the Ether lending and short-to-long indicators.
This results in bulls being in control as traders are not comfortable taking bearish positions with ETH below $1,300.
