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Source: Сointеlеgrаph

The price of Ether (ETH) was down 11.9% from Nov. 20 to Nov. 22, hitting a low of $1,074, its lowest level since July. Investors now have reason to be concerned after crypto lending company Genesis reportedly had difficulty raising money, sparking insolvency rumors on November 21st.

However, a Genesis spokesperson told that the company has no plans for imminent bankruptcy as the company continues to negotiate with its creditors.

Concerns about the centralization of decentralized finance (DeFi) arose after Uniswap Labs changed its privacy policy on Nov. 17 to reveal that it collects public blockchain data, user browser information, operating system data, and interactions with its service providers.

Adding to the scandal, the hacker behind the $447 million theft on the FTX exchange has been spotted moving his funds on Ethereum. On November 20, the attacker transferred 50,000 ETH to a separate wallet and converted it to Bitcoin using two renBTC bridges.

Traders fear that a hacker could suppress the price of Ether to profit by using leveraged short bets. The rumor was picked up by @kundunsan on November 15, though the tweet didn’t get much publicity.

Let’s take a look at the Ethereum derivatives data to see if deteriorating market conditions have affected crypto investor sentiment.

Professional traders have been in a state of panic since November 10th.

Quarterly futures are generally avoided by retail traders due to their price differential with the spot markets, but they are the preferred tool of professional traders because they prevent the fluctuations in funding rates that often occur in perpetual futures contracts.

Annual premium on 2-month Ether futures. Source: Laevitas.ch

YOY premium for 3-month futures should be +4% to +8% in healthy markets to cover costs and associated risks. The chart above shows that derivatives traders have been bearish since November 10 as the Ether futures premium has been negative.

Currently there is a backwardation in contracts and this situation is atypical and usually considered bearish. The figure did not improve after ETH surged 5% on November 22, reflecting the reluctance of professional traders to add long (bullish) positions with leverage.

Traders should also analyze the Ether options markets to rule out externalities specific to the futures instrument.

Options traders fear new crashes

A skewed delta of 25% is a telling sign that market makers and arbitrage firms are overpriced for up or down protection.

In a bear market, options investors give a higher chance of prices falling, causing the skew indicator to rise above 10%. On the other hand, bull markets tend to cause the skew indicator to go below -10%, which means discounting bearish puts.

60-day Ether options with a delta skew of 25%: Source: Laevitas.ch

The delta skew has crossed the 10% threshold since November 9, signaling that option traders are less likely to offer downside protection. Things worsened in the following days as the delta skew indicator rose above 20%.

The skew of the 60-day delta is currently 23%, so the whales and market makers are estimating a higher chance of Ether price declines. Hence, the derivatives data shows low confidence as Ethereum struggles to hold onto the $1,100 support.

According to the data, Ethereum bulls should not give up just yet because these numbers tend to be retrospective. The panic that followed the FTX bankruptcy and subsequent liquidity problems at Genesis could quickly dissipate if exchanges, public proof of reserves, and institutional investors adding bitcoin during the downturn are interpreted by market participants as positive.

With that said, for now, Ethereum bears still have the upper hand in line with ETH derivatives performance.

The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of .

Source: Сointеlеgrаph

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