ETH’s 13% drop to $4,100 led to $200 million in futures liquidations, but pro traders still have reason to stay long and strong. Ether (ETH) traders might have a few reasons to panic after today's 13% drop down to $4,100. The swift pullback appears to have broken a 55-day ascending channel that had a target at $5,500. Those not worried about technical analysis will understand that the cryptocurrency's 3.4% daily volatility justifies the 10% negative price swing. Still, one should not disregard externalities such as the United States infrastructure bill approval on Monday.
The legislation requires that digital asset transactions worth more than $10,000 are reported to the Internal Revenue Service. It remains unknown whether that will be applied to individuals and businesses developing blockchain technology and wallets.
Furthermore, on Nov. 12, the United States Securities and Exchange Commission officially denied VanEck's spot Bitcoin exchange-traded fund application request. The regulator cited "fraudulent and manipulative acts and practices," along with the lack of transparency on Tether’s (USDT) stablecoin.
The unexpected ETH price move triggered $200 million worth of leveraged long futures contract liquidations but the open interest on Ether's futures markets is still healthy. Notice how the current $11.9 billion still in place for perpetual and quarterly futures contracts is 37% higher from two months ago. However, the number of leverage longs (buy) and shorts (sell) are matched at all times in any derivatives contract.
To determine whether professional traders are leaning bearish, one should start by analyzing the futures premium — also known as the basis rate. This indicator measures the price gap between futures contract prices and the regular spot market. Ether's quarterly futures are the preferred instruments of whales and arbitrage desks. Even though derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, the most significant advantage is the lack of a fluctuating funding rate.
The three-month futures typically trade with a 5% to 15% annualized premium, which is deemed an opportunity cost for arbitrage trading. By postponing settlement, sellers demand a higher price, and this causes the price difference. As depicted above, Ether's surge past $4,000 on Oct. 21 caused the basis rate to touch the 20% level, which marks some excessive leverage from buyers. After three weeks ranging between 14% and 20%, the indicator dropped to the current 12%.
Although the basis rate remains neutral-to-bullish, it signals that some buyers' excess heat was terminated, which is essentially a healthy cleansing. Considering the drastic image portrayed by the ascending channel break, Ether traders should consider derivatives' data as a brief cool off period.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||7d price change|
|1||BTC||Bitcoin predictions||80.8%||26||$18 917.31||-1.02%||-4.11%||$362 463 667 283|
|2||ETH||Ethereum predictions||72.8%||54||$1 298.77||-3.27%||-6.06%||$159 129 662 025|
|3||USDT||Tether predictions||96%||1||$1.000070||0%||0%||$67 959 486 248|
|4||USDC||USD Coin predictions||91.6%||1||$1.000058||0.01%||0%||$49 596 112 733|
|5||BNB||Binance Coin predictions||90.8%||15||$274.90||-1.14%||0.65%||$44 352 122 648|
|6||XRP||XRP predictions||61.6%||74||$0.501984||0.54%||26.46%||$25 023 258 974|
|7||BUSD||Binance USD predictions||96%||1||$1.000777||0.03%||0.03%||$20 533 202 140|
|8||ADA||Cardano predictions||83.2%||32||$0.449897||-2.32%||-3.88%||$15 400 494 496|
|9||SOL||Solana predictions||84.8%||28||$32.71||-3.79%||0.84%||$11 601 976 269|
|10||STETH||Lido stETH predictions||95.6%||1||$2 941.39||-0.40%||-3.32%||$10 258 752 564|
|11||DOGE||Dogecoin predictions||85.6%||14||$0.061846||-3.69%||3.13%||$8 205 146 170|
|12||DOT||Polkadot predictions||78.8%||41||$6.23||-3.04%||-8.15%||$6 984 955 644|
|13||DAI||Dai predictions||90.8%||1||$0.999539||-0.04%||-0.04%||$6 927 324 765|
|14||MATIC||Polygon predictions||73.6%||55||$0.749357||-2.69%||-5.72%||$6 545 118 739|
|15||SHIB||SHIBA INU predictions||76.4%||42||$0.000011||-3.43%||-2.78%||$6 126 642 475|
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