Bullish sentiment begins to fade after Ethereum all-time high at $4,200
May 11, 2021. Summarized by summa-bot.
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Ethereum price soared to $4,200 but derivatives data reflects a decline in the bullish sentiment of Ether futures and options traders.
In the face of such a mind-blowing performance, neither the futures contracts premium nor the options fear and greed indicator signal extreme optimism in the market.
This data will likely lead some analysts to question whether traders are losing confidence in Ether's future price prospects.
At the same time, VanEck's SEC filing for an ETH exchange-traded fund (ETF) further proves that the bullish outlook for Ether remains strong.
To confirm whether investors' confidence dropped as Ether reached its all-time high, one should monitor the monthly contracts premium, known as the basis.
By measuring the price gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
Whenever there's excessive optimism from buyers, the three-month futures contract will trade at a 20% or higher annualized premium (basis).
To assess a trader's optimism level after Ether painted the $4,200 all-time high, one should look at the 25% delta skew.
As it gravitates towards negative 20, it is usually considered a "greed" momentum, which took place on May 9 as Ether marked its all-time high.