Ethereum price resistance at $1,750 could reflect traders’ anxiety over the Shanghai upgrade

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Ether (ETH) price fell 9.8% between Feb. 19 and Feb. 25 after price resistance at $1,725 ​​turned out to be stronger than expected. Still, the correction wasn’t enough to break the six-week-long rising channel and didn’t turn the Ether derivatives indicator bearish.

Ether’s price resilience can be partially explained by the operational failures of some smart contract blockchain competitors. For example, Solana (SOL) faced his 20 hour protracted crisis. blackout This was only resolved after a network upgrade coordinated by validators. The network restart also included purging some of the most recent slots, but Solana devs said, “No user has been confirmed to have his transactions rolled back or affected.” said.

NEM (XEM) experienced a “chain outage” lasting 15 hours on February 27, with deposits and withdrawals suspended on multiple exchanges, with the developer promising to release an update to prevent further fraud. Curiously, the most recent post from the official NEM account on Twitter was a “please wait” image posted in July 2022, with the exception of Merry Her Christmas Greetings.

The cryptocurrency regulatory environment remains bleak, with the latest victims being global payment processors Visa and Mastercard. According to a Reuters report published on February 28, the companies have delayed the launch of new partnerships with cryptocurrency firms until market conditions improve and a more transparent regulatory framework is established. I’m here.

In more positive news, Ethereum’s Seporia testnet successfully hard forked on February 28 in preparation for its Shanghai upgrade. With the long-awaited mainnet update scheduled for March, validators will finally be able to withdraw their staked Ether from the beacon chain. Developers are currently preparing the Goerli testnet to enter a similar phase.

To understand if the February 25 support retest at $1,560 affected crypto investor sentiment, let’s take a look at the Ether derivatives data.

ETH Futures Show Increased Demand For Leveraged Longs

In a healthy market, the annualized 2-month futures premium should trade between 5% and 10% to cover the costs and associated risks. However, when a contract trades at a discount (backwardation) against the traditional spot market, it indicates a lack of confidence from traders and is considered a bearish indicator.

The chart above shows that derivatives traders turned slightly bullish as the Ether futures premium (average) fell below the 5% threshold on February 26. February 25th.

Increased demand for leveraged longs (bullish) does not necessarily lead to expectations of positive price action. Therefore, a trader should analyze his Ether options market to understand how whales and market makers are setting the odds for future price movements.

Options risk indicator shows resilience despite 10% price drop

A delta skew of 25% is a sign that market makers and arbitrage desks are overcharging for upside or downside protection.

In a bear market, the skew indicator exceeds 10% as options investors set higher odds for a decline. On the other hand, in a bull market, the skew indicator tends to be less than -10%, implying less demand for bearish put options.

Related: Vitalik Buterin says ‘more needs to be done’ on high Ethereum txn fees

Delta skew flirts at the bearish 9% level on Feb 27, indicating stress from professional traders. However, things improved as the index moved to 5 on February 28th.

It makes sense for fundamental analysts to avoid adding bullish positions ahead of Shanghai’s upgrade. Especially since Ethereum developers have a history of delaying major changes to the network.

Despite a range of worrisome factors, options and futures markets show professional traders to be conservatively bullish and confident that the uptrend pattern will hold. Investors seem to believe the bullish trend will continue unless Ethereum breaks below the channel support of $1,520.