Ethereum options data show pro traders ready to go long into ETH’s Merge

Ether (ETH) is down 11.5% in seven days even after the latest affirmation of the “Ethereum merge” transition to a proof-of-stake (PoS) consensus community in September. In the course of the Ethereum core builders convention name on July 14, developer Tim Beiko proposed Sept. 19 because the tentative goal date.

The transition out of energy-intensive mining has been delayed for years, and the journey towards scalability utilizing sharding expertise — parallel processing functionality — is but to be scheduled. Nonetheless, some analysts anticipate the community’s financial coverage to spice up the worth of Ether.

Ethereum researcher Vivek Raman highlighted the impact of the “provide shock” and in response to the analyst, the “merge” will “cut back ETH’s whole provide by 90%,” though no profit in transaction charges is to be seen within the present transition stage.

Regulatory uncertainty might be partially answerable for Ether’s latest sharp correction. A category-action has been proposed towards Yuga Labs for “inappropriately inducing” the group to purchase nonfungible tokens (NFTs) and the ApeCoin (APE) token. Moreover, the legislation agency claims that Yuga Labs used celeb promoters and endorsements to “inflate the value” of the BAYC NFTs and the APE tokens.

Furthermore, on July 26, Infrawatch PH, a assume tank within the Philippines, filed a criticism to the native regulator to crack down on Binance’s actions and alleged unregistered operations. The petition claims that the exchange has no office in Manila and only uses “third-party companies” for its technical and customer support services.

Options traders are nowhere near optimistic

Investors should look at Ether’s derivatives markets data to understand how whales and arbitrage desks are positioned. The 25% delta skew is a telling sign whenever traders overcharge for upside or downside protection.

If those market participants feared an Ether price crash, the skew indicator would move above 10%. On the other hand, generalized excitement reflects a negative 10% skew.

Ether 30-day options 25% delta skew: Source:

The skew indicator exited the “fear” zone on July 16 as Ether broke above $1,300, its highest level in 33 days. However, the improvement in traders’ sentiment was not enough to instill confidence as the metric has since remained at the “neutral” threshold. ETH option traders are currently assessing similar upside and downside price movement risks.

Long-to-short data show a modest improvement in sentiment

The top traders’ long-to-short net ratio excludes externalities that might have solely impacted the options markets. This metric gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus better informing on how professional traders are positioned.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.

Exchanges’ top traders Ether long-to-short ratio. Source: Coinglass

Even though Ether has failed to break the $1,600 resistance, professional traders did not reduce their leverage long positions between July 19 and 26, according to the long-to-short indicator.

Binance traders long-to-short ratio failed to hold the 1.13 mark but finished the period at the same level it started, near 1.05. Huobi displayed a modest decrease in its long-to-short ratio, as the indicator moved from 1.02 to the current 0.98 in seven days.

However, at the OKX exchange, the metric drastically increased within the period, from 0.88 on July 19 to the present 1.37. Thus, on average, traders increased their bullish positions in seven days.

There hasn’t been a significant change in whales and market makers’ leverage positions despite Ether’s 11.5% correction since July 19. Furthermore, options traders are pricing similar risks for Ether’s upside and downside moves, while leverage futures players slightly increased their bullish bets. The overall derivatives metrics reading is positive even though ETH failed to break the $1,600 resistance.

The views and opinions expressed here are solely those of the author and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer includes threat. It is best to conduct your individual analysis when making a call.