Ethereum approaches a new ATH, but derivatives data reflects mixed emotions

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Today, the price of Ether (ETH) briefly touched $ 4,760, exciting investors and reminding the world that altcoin is only 2.2% below the record high of $ 4,870 reached 20 days ago. While the spot price action can be intriguing, let’s see what’s going on in the Ether derivatives markets.

Ether ETH / USD price on Bitstamp. Source: TradingView

While it is possible to draw a descending channel that shows support at $ 3,960, today’s positive 5.4% move appears to be decoupled from the negative performance of Bitcoin (BTC).

Earlier today, commodities and stocks were hit after the US Federal Reserve recognized that inflation is more than just a ‘transitional’ trend and Fed Chairman Jerome Powell said that the bank’s relaxed monetary policies could end sooner than expected.

Retail traders are not fully confident

To understand how confident traders are about the recovery in Ether prices, one needs to analyze perpetual futures data. This instrument is the preferred market for retail traders because its price tends to follow regular spot markets.

In any futures trading, long (long) and short (short) positions are matched at all times, but their leverage varies. Therefore, the exchanges will charge a funding rate to the party that requires the most leverage, and these fees are paid to the opposing party.

8 hour perpetual term finance rate on ether. Source: Coinglass.com

Neutral markets tend to have a positive funding rate of 0% to 0.03%, which equates to 0.6% per week. This indicates that the buys are the ones that pay and the data shows retail traders have been mostly neutral since November 4 and the last move above 0.07% occurred on October 21.

The best traders reduced their long positions

The data provided by the stock exchange highlights the net long-to-short positioning of traders. By analyzing each client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are bullish or bearish.

Sometimes there are discrepancies in methodologies between different exchanges, so viewers should watch for changes rather than absolute numbers.

Trade the best long / short ratio ETH traders. Source: Coinglass.com

Despite the 17% Ether rally over the past four days, top traders in Huobi and OKEx have reduced their long positions. This move was even more evident at OKEx as the indicator went from a bull preference of 120% on November 25 to a meager 30% advantage three days later.

Currently, the data indicates that whales and arbitrage bureaus have reduced their long exposure, while retail traders remain wary of the recent bull run.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.