On December 17, Ether (ETH) price soared to $ 677, its highest level since May 2018, and it appears that the highest altcoin’s price was driven by Bitcoin’s (BTC) rapid move above USD 21,000. It is also possible that the CME’s ETH Futures Launch announcement also played a part.
Solid fundamentals and a positive news flow also appear to be helping Ether hold above USD 640 for the past few days, and despite the current dump, these fundamentals persist. Eth2 stakeouts surpassed $ 1 billion locked in total value, showing that major players are committed to the long term as it is currently not possible to exchange these tokens.
To understand whether the recent pump reflects a temporary excitement or possibly a new price level, one has to measure the usage statistics on the Ethereum network.
An excellent place to start is to analyze transactions and transfer value.
The chart above shows how strongly the indicator rebounded after a brief decline on December 15. The continued level above $ 2 billion daily transactions and wire transfers indicates a healthy improvement over the previous two months.
Therefore, the move to $ 640 was in line with Ethereum’s blockchain activity.
Payouts on the exchange have resumed
Increasing withdrawals from exchanges can be for a variety of reasons including staking, crop farming, and buyers sending coins to cold storage. Usually, a steady stream of net deposits indicates a willingness to sell in the short term.
Between December 16 and 18, there were 232,000 deposits of Ether on the exchanges, a trend that lasted 14 days. During those two weeks, withdrawals exceeded deposits by 470,000. This shows that there was selling pressure when the price of Ether passed $ 600.
It’s worth noting that December 19 marked a net take-up of 293,000 Ether, the largest outflow since October 14. Thus, the initial move of investors rushing to make a profit in excess of $ 600 could have disappeared.
While it is too early to determine whether a second wave of deposit will occur in the exchanges, so far the indicator shows that traders are willing to accumulate at current price levels.
Futures premium spiked but has since normalized
Professional traders tend to dominate longer-term futures contracts with fixed expiration dates. By measuring the cost gap between futures and the regular spot market, a trader can measure the level of optimism in the market.
The three-month futures are typically traded at a premium of 1.5% or higher over regular spot exchanges. Anytime this indicator fades or goes negative, it’s an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.
The chart above shows that the indicator peaked at 5.8% on December 19, but later adjusted to 5% as Ether stabilized near USD 650. Sustained levels above 3.5% indicate optimism, although far of excessive.
Still, the current rate of more than 4% equals an annual premium of 17% and is significantly higher than the level of previous months. This shows that despite the weakness on December 19, professional traders are still confident in Ether’s bullish potential.
Spot volume is recovering
In addition to tracking futures contracts, profitable traders also track volume in the spot market. Breaking resistance levels on low volumes is somewhat intriguing, as low volumes typically indicate a lack of confidence. Therefore, significant price changes must be accompanied by a robust trading volume.
Even excluding December 17, last week’s impressive $ 3.2 billion volume is still significantly higher than average. Volume spikes usually accompany new price heights, although some volume accumulation is expected thereafter.
The current weekly average signal strength of $ 1.5 billion per day leaves no doubt that a decent current supported the $ 600 resistance break.
Put / call ratio options
By measuring whether more activity is taking place via call (buy) options or put (sell) options, one can gauge general market sentiment. Generally, call options are used for bullish strategies, while put options are used for bearish.
A put-to-call ratio of 0.70 indicates that the open rate of put options lags 30% behind the more bullish calls and is therefore bullish.
Investors have been trading a larger volume of call options since December 11. This indicates a trend break from a more bearish movement that lasted two weeks.
This data is very encouraging as Ether is up 20% since Dec. 11, but there is no sign that investors have bought more neutral to bearish options strategies.
Despite some signs of weakness after Ether tested its all-time high of $ 677 on December 17, each of the five indicators discussed above has maintained bullish levels.
While Ether managed to quickly rebound from its below $ 600 dip on December 21, investors grew more confident that the uptrend had not been broken.
The views and opinions expressed here are solely those of the author and do not necessarily reflect Cointelegraph’s opinion. Every investment and trade move carries risks. You should do your own research when making a decision.