Ether (ETH) rejected the $2,000 resistance on August 14, but the solid 82.8% gain since the rising wedge started on July 13 certainly looks like a bull win. Undoubtedly, the dream of “ultrasonic money” is getting closer as the network expects the Merge transaction to reach a proof-of-stake (PoS) consensus network on September 16.
Some critics point out that the transition from proof-of-work (PoW) mining has been delayed for years and that the merger itself does not address the scalability problem. The network migration to parallel processing (sharding) is expected to occur later in 2023 or early 2024.
As for the Ether bulls, the EIP-1559 combustion mechanism introduced in August 2021 was essential to drive ETH towards scarcity, as crypto analyst and influencer Kris Kay illustrates:
~11% of everything $ETH offer now available.
~2% of all $ETH delivery now burnt
~ 100% of $ETH is ultrasound money
— Kris Kay | DeFi Donut (@thekriskay) August 15, 2022
The highly anticipated move to the Ethereum beacon chain has been widely criticized, despite the elimination of the need to support the expensive energy-intensive mining operations. Below, “DrBitcoinMD” highlights the inability for ETH strikers to withdraw their coins, creating an unsustainable temporary discount on the offer side.
Anyone who still puts their trust in the lanky Russian pseudo-intellectual and the Ethereum ponzi deserves what happens to them. pic.twitter.com/gjxHXdzuSK
— Doc (@DrBitcoinMD) August 11, 2022
Undoubtedly, the reduced number of coins for sale caused a supply shock, especially after Ether’s 82.8% rally recently. Still, these investors knew the risks of ETH 2.0 strike and no promises were made for immediate transfers after the merger.
Options markets reflect dubious sentiment
Investors should look at data from Ether’s derivatives markets to understand how whales and arbitrage firms are positioned. The 25% delta skew is a telltale sign when traders are charging too much for upside or downside protection.
If those market participants feared an Ether price crash, the skew indicator would rise above 12%. On the other hand, generalized arousal reflects a 12% negative skew.
The skew indicator has remained neutral since Ether began the rally, even as it tested the $2,000 resistance on Aug. 14. The absence of improvement in market sentiment is somewhat concerning as ETH options traders are currently assessing similar upside and downside price movement risks.
Related: Ethereum ICO Era Whale Address Transfers 145,000 ETH Weeks Ahead of the Merger
Meanwhile, the long-to-short data shows low confidence at the $2,000 level. This metric excludes externalities that may have impacted only the options markets. It also collects data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, providing better information on how professional traders are positioned.
There are occasional methodological differences between different exchanges, so readers should keep an eye out for changes rather than absolute numbers.
While Ether is up 18% from August 4-15, professional traders have slightly lowered their leveraged long positions, according to the long-to-short indicator. For example, Binance traders’ ratio improved slightly from the start of 1.16, but ended the period below the starting level at 1.12.
Meanwhile, Huobi showed a modest decline in its long-to-short ratio as the indicator moved from 0.98 to the current 0.96 in 11 days. Finally, the statistic peaked at 1.70 on the OKX exchange, but rose only slightly from 1.46 on August 4 to 1.52 on August 15. So, on average, traders were not confident enough to keep their leveraged positions bullish.
There has been no significant change in the leverage positions of whales and market makers, despite Ether’s 18% gains since August 4. If options traders are pricing in similar risks to Ether’s ups and downs, there’s likely a reason. For example, a strong support of the proof-of-work fork would put pressure on ETH.
One thing is certain, at this point, professional traders are not confident that the USD 2,000 resistance will be easily broken.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risks. You should do your own research when making a decision.