Today Ether (ETH) the price briefly touched $ 4,760, exciting investors and reminding the world that the altcoin is just 2.2% below the all-time high of $ 4,870 reached 20 days ago. While spot price action can be intriguing, let's see what's happening in the Ether derivatives markets.
While it is possible to draw a descending channel showing support at $ 3,960, today's positive 5.4% move appears decoupled from Bitcoin's (BTC) negative performance.
Earlier today, commodities and stocks took a hit after the U.S. Federal Reserve acknowledged that inflation is more than a "transitory" trend and Fed Chairman Jerome Powell said the bank's loose monetary policies could end earlier than expected.
Retailers are not completely sure
To understand how confident traders are about the Ether price recovery, one must analyze the futures data for perpetual contracts. This instrument is the preferred market for retail traders because its price tends to follow the regular spot markets.
In any futures contract trading, longs (buyers) and shorts (sellers) are equalized at all times, but their leverage varies. Consequently, exchanges will charge a funding fee to the side that demands the most leverage, and this fee will be paid to the opposite side.
Neutral markets tend to show a positive funding rate of 0% to 0.03%, which is equivalent to 0.6% per week. This indicates that longs are the ones that pay and the data shows that retail traders have been mostly neutral since November 4 and the last move above 0.07% occurred on October 21.
The best traders have reduced their long positions
Data provided by Exchange highlights traders' net long-to-short positioning. By analyzing each client's position on the ground, perpetual and futures contracts, you can better understand whether professional traders are leaning higher or higher.
There are occasional discrepancies in methodologies between different exchanges, so viewers should monitor changes rather than absolute numbers.
Despite Ether's 17% rally in the past four days, major traders Huobi and OKEx decreased their long positions. This move was even more apparent on OKEx as the indicator made a drastic move from favoring the bulls by 120% on November 25 to a slim 30% lead three days later.
Currently, data indicates that whales and arbitrage desks have reduced their prolonged exposure, while retail traders remain suspicious 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 movement involves risk. You should do your own research when making a decision.
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