Even as professional traders become bearish, the price of Ethereum continues to rise.

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The Ethereum price is on its way to a new level, but this main ETH derivatives metric indicates that professional traders are treading carefully.

On April 18, the price of Ether (ETH) plummeted by 19.6 percent, prompting the liquidation of $1 billion in long futures contracts. Despite the scale of this record liquidation and its effect on Ether price, futures open interest stood above $20.5 billion, a 5% decrease from the previous month.

After the sell-off, there were signs that investor sentiment deteriorated, which was evident in derivatives markets.

Historically, there’s much higher borrowing demand for Ether longs as opposed to shorts. Over the past couple of days, the long-to-short ratio flipped, reaching the lowest level since December 2018.

ETH futures aggregate open interest. Source: Bybt

There isn’t any news to excuse the significant price drop, as Ether has little to do with Coinbase ($COIN) shares collapsing, Bitcoin’s (BTC) falling hashrate, or TV host Jim Cramer branding Bitcoin “phoney money.”

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Investors, on the other hand, have cause to be concerned over upcoming harsh cryptocurrency legislation. Unsubstantiated reports of the US Department of Treasury bringing money laundering charges surfaced over the weekend. The emphasis may have been on financial institutions that used cryptocurrency, but this hasn’t happened.

Janet Yellen, the Secretary of the United States Treasury and a vocal opponent of cryptocurrencies, said in February that the use of cryptocurrencies for illicit purposes is an increasing issue. Meanwhile, the Treasury Department’s Financial Crimes Division has hinted that monitoring of international financial accounts may require digital currencies.

FinCEN may soon force persons to submit annual Reports of International Bank and Financial Accounts, or FBARs, for cryptocurrencies kept on foreign exchanges as a result of the potential step.

As a result, the proposed regulatory reforms could have fuelled investors’ increased interest in Ether shorts. Surprisingly, the price of Ether is actually less than 5% lower than its all-time peak of $2,550.

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Ether price (orange) and Ether long-to-short ratio at Bitfinex (blue). Source: TradingView

Over the last few months, the average demand for Ether longs at Bitfinex exchange has been 65 percent higher than shorts, as seen in the chart above. This indicator changed on April 20, preferring shorts and hitting its lowest level since December 2018.

Another factor leading traders to be more cautious is Ethereum network congestion. The average transaction cost has been about $16 in the last few months, making it impractical for individuals seeking to encourage smaller transactions.

The latest Berlin update paved the way for the much larger London hard fork, which will allow EIP-1559. The contentious move would restructure Ethereum’s current fee structure, but experts have confirmed that the new base fee system would not offer a long-term solution to Ethereum’s scalability issues.

Whatever the explanation for Bitfinex’s margin market changes in favour of bulls, there’s no better sign than the 20% rise in ETH price over the previous four days. As of now, this isolated measure can not be regarded as concerning, as it seems that the price of Ether is on the way to new all-time highs.

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