Traders foresee $2,500 ETH based on a 38 percent premium on Ethereum futures.

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Futures markets are steadily optimistic on the short-term price of Ether, with $2,500 currently in play.

Now that the price of Ether (ETH) has crossed the $2,000 mark and touched all-time highs this week, markets have turned overly optimistic and are expecting more upside in the short term.

According to some observers, Visa’s initial USD Coin (USDC) stablecoin transaction settlement on the Ethereum network triggered the most recent rally. Others believe the recent Ether price increase is the result of a “triangle market structure” breakout.

Regardless of the explanation for the latest 25% rally, experienced traders tend to be very positive this time around. This inference can be taken from the surging futures foundation, which has hit its highest level ever.

This movement raises the risk of cascading liquidations due to undue buyer leverage, but experienced traders seem optimistic, as shown by the delta skew indicator.

 

Ether (ETH) price at Coinbase, USD. Source: TradingView

Investors may be looking forwards to the protocol enhancement plan EIP-1559, which is scheduled to go live in July and aims to counter the rising gas fees. The update plans to use variable block sizes rather than the existing set standard, and it strives for network penetration of less than 50%.

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To determine if experienced traders are bullish, one should first examine the futures premium (also known as the basis). This metric calculates the price differential between futures contract prices and spot market prices.

 

OKEx 3-month ETH futures basis. Source: Skew

The 3-month futures should usually trade with a 10% to 20% annualized premium, comparable to the stablecoin lending rate. By postponing settlement, sellers demand a higher price, causing the price difference.

To accurately interpret how experienced traders balance the risks of sudden price movements, one should look to the options market.

The 25 percent delta skew offers an accurate and immediate “fear and greed” review. This measure contrasts comparable call (buy) and put (sell) options side by side and turns pessimistic when the premium for neutral-to-bearish put options is greater than the premium for similar-risk call options. This is generally viewed as a “fear” situation, but it happens often during strong rallies.

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A pessimistic skew, on the other hand, indicates a higher cost of upside defence and leads to bullishness.

 

Options markets are also leaning bullish

The options market should be used to accurately analyse how experienced traders balance the uncertainties of unpredictable market movements.

The 25% delta skew offers a dependable and instantaneous “fear and greed” analysis. This measure contrasts comparable call (buy) and put (sell) options side by side and turns pessimistic when the premium for neutral-to-bearish put options is higher than the premium for similar-risk call options. This is generally viewed as a “fear” situation, but it happens often during strong rallies.

A pessimistic skew, on the other hand, leads to a higher cost of upside defence and suggests bullishness.

 

Deribit 90-day ETH options 25% delta skew. Source: laevitas.ch

For the first time since February 5, the options skew tracker is bullish, though it is still close to the negative 10% neutral mark. Furthermore, over the last five weeks, the “fear and greed” metric has steadily changed.

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Fear of a sudden correction after breaking the $2,000 psychological threshold, close to the one seen on Feb. 19, is one of the reasons for the cautious optimism.

This moment, though, the futures markets seem to be in decent condition, and experienced traders appear to be accumulating positions as Ether hits a new all-time peak.

 

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