Ethereum data shows how bearish professional traders are

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Ethereum
Ethereum

The Ethereum The futures premium has turned bearish and the network’s TVL is down 22% from its peak, but how does this affect the sentiment of professional traders?

Ethereum (ETH) lost the psychological support level of $3,000 on April 11 after a weekly negative performance of 16%. Bulls were flatly surprised as $104 million of long futures contracts were liquidated on April 11th. etherThe slowdown was also followed by a decrease in the total locked value (TVL) in Ethereum smart contracts.

The metric peaked at 40.6 million Ethers on January 27 and has since fallen by 22%. This indicator could partly explain why Ether could not withstand the adversity caused by Bitcoin (BTC)’s 13% weekly negative movement.

However, the leading altcoin has its own catalysts as Ethereum developers implemented the network’s first “shadow fork” on April 11. The testnet update created an area for developers to stress-test their assumptions about the network’s complex transition to proof-of-stake.

Most importantly, one needs to analyze how professional traders position themselves and there is no better metric than the derivatives markets.

Ethereum futures premium is back to lower levels

To understand whether the current downtrend reflects the sentiment of top traders, one must analyze the premium for Ether futures, also known as the “base”. Unlike a perpetual contract, these fixed-calendar futures contracts do not have a financing rate, so their price will differ significantly from regular spot exchanges.

A trader can gauge market sentiment by measuring the expense gap between futures contracts and the regular spot market. The neutral market should offer an annual premium of 5% to 12% (base) as sellers demand more funds to withhold settlement for a longer period.

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