Ethereum: Why this move might not be the best option for traders!

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Is it time to pack your belongings now that Ethereum has surpassed $2300? Exit the market or keep Hodling — these were the two primary questions on the minds of Ethereum traders.

The largest cryptocurrency, Ethereum, had its first substantial rebound in weeks, breaking above the $2300 valuation. For the first time since June 18th, ETH reached a value more than $2300. The $2300 level has also acted as a historical resistance, therefore there are a few signs that a significant bullish momentum may emerge, propelling the price higher in the charts.


Ethereum Put/Call Ratios consistently down

The Open-Interest for ETH Put/Call Ratio was at 0.91 in the beginning of May 2021, however it has since decreased to 0.59. It showed that throughout the bearish phase, selling contracts expired or reached their departure thresholds, resulting in growing call orders. As a result, traders are now anticipating prices to rebound as the selling pressure in the charts decreases.

Source: Skew

Furthermore, the shift in mood can be seen in the fact that 27 percent of Options Traders predict Ethereum to close above $2600 by the end of July, putting it on track to re-test key resistance above $3000 during the timeframe. While these behaviours certainly signal a bearish trend reversal, not everything is in the green.

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Importance of Implied Volatility?

Now, the role of implied volatility has been defined quite clearly throughout a bullish rebound, raising the concern that it had proceeded to taper off to a lower range at press time. Realized Volatility has levelled down, but the declining implied volatility suggests that prices are still in a cautious zone, where significant resistance levels are unlikely to be breached.


Source: Skew

The outcomes of Ethereum futures permanent funding across multiple exchanges were likewise varied. When the aggregate funding rate is positive, it is a healthy bullish indicator since long orders pay dividends to short orders, but a varied rate across different platforms indicated uncertainty.

So what does the current price structure suggest?

Source: Trading View

Keeping the previous week in perspective, it is a great reversal that Ethereum regained almost 17%, finally ending over the $2300 level. However, if the current daily chart is examined, it is now under negative pressure, which has pushed the asset below $2300. It is critical to note that this may be a reactive pullback, and the objective remains $2650 if stronger confirmations for a bullish lockout are required.

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Until then, it is too early to tell whether Ethereum has broken free from its bearish constraints.


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