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||62.4%||82||$29 106.25||-2.42%||5.31%||$554 291 732 800|
|2||ETH||Ethereum predictions||60.4%||82||$1 948.76||-4.39%||2.87%||$235 479 609 902|
|3||USDT||Tether predictions||93.6%||1||$0.998927||0.01%||0.45%||$74 133 574 134|
|4||USDC||USD Coin predictions||92%||1||$1.000000||-0.02%||-0.02%||$52 342 870 112|
|5||BNB||Binance Coin predictions||60.4%||84||$295.00||-1.85%||22.08%||$48 166 486 706|
|6||XRP||XRP predictions||67.2%||71||$0.409415||-4.38%||13.13%||$19 792 398 575|
|7||BUSD||Binance USD predictions||92%||1||$0.999245||-0.27%||-0.42%||$18 398 603 846|
|8||ADA||Cardano predictions||65.2%||79||$0.514791||-8.42%||17.73%||$17 375 510 992|
|9||SOL||Solana predictions||63.2%||84||$50.79||-8.30%||15.69%||$17 139 777 776|
|10||DOGE||Dogecoin predictions||62%||87||$0.084252||-5.17%||11.85%||$11 177 788 099|
|11||DOT||Polkadot predictions||60.4%||78||$9.61||-8.87%||19.27%||$9 486 356 576|
|12||WBTC||Wrapped Bitcoin predictions||63.6%||82||$29 092.16||-2.40%||5.58%||$8 144 434 333|
|13||AVAX||Avalanche predictions||61.6%||82||$29.59||-11.64%||6.16%||$7 963 113 848|
|14||TRX||TRON predictions||70.8%||55||$0.071826||-0.02%||-1.60%||$7 007 431 948|
|15||DAI||Dai predictions||93.6%||1||$1.000124||0.04%||0%||$6 501 256 168|
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