Since striking an all-fourth dimension high at $4,870 on November. ten, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned virtually the seemingly bearish market structure.

Ether/USD price on FTX. Source: TradingView

Notice how the toll peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors abroad from the sector. In a press conference on Dec. 17, Russia's Central Banking company governor, Elvira Nabiullina, stated that banning crypto in the land is "quite achievable."

Nabiullina cited crypto's frequent use for illegal operations and pregnant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by proverb they are not backed past anything. Interestingly, the country plans to launch its ain central bank digital currency fifty-fifty every bit the Russian ruble lost 44% against golden over the past four years.

In the United states, a bipartisan group of U.S. senators has called on Treasury Secretarial assistant Janet Yellen to clarify the linguistic communication in the infrastructure bill relating to the crypto revenue enhancement reporting requirements. Under the electric current broader "broker" definition, miners, software developers, transaction validators and node operators will probable be required to report digital asset transactions worth more than $x,000 to the Internal Acquirement Service.

Even with the regulatory uncertainty and negatively skewed cost activeness, traders should monitor the futures contracts premium — also known every bit the "basis rate" — to analyze how bullish or bearish professional traders are.

Pro traders are neutral despite the price weakness

The basis indicator measures the difference between longer-term futures contracts and the current spot market place levels. A five% to xv% annualized premium is expected in salubrious markets. This price gap is caused by sellers demanding more coin to withhold settlement longer.

Yet, a reddish alarm emerges whenever this indicator fades or turns negative, as well known as "backwardation."

Ether 3-month futures basis rate. Source: Laevitas.ch

Detect how the sharp subtract after the 24% intraday crash on Dec. three caused the annualized futures premium to reach its everyman level in ii months. Subsequently the initial panic, the Ether futures market recovered to the current ix% level, which is close to the heart of the "neutral" range.

To confirm whether this motion was specific to that musical instrument, traders should also clarify the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent considering the protective put options premium is college than like risk phone call options.

When marketplace makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are commonly accounted neutral.

Ether 30-mean solar day options 25% delta skew. Source: Laevitas.ch

Related: Senate hearing on stablecoins: Compliance anxiety and Republican pushback

For the past three weeks, the 25% delta skew ranged between a positive iii and viii, which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market place makers are not worried virtually the recent price weakness.

If investors "zoom-out" a fleck, they will run into that Ether's year-to-appointment gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-fourth dimension loftier.

Furthermore, the Ethereum network's full value locked in smart contracts doubled over the past six months to $148 billion. This information gives derivatives traders the confidence needed to remain calm fifty-fifty with the current short-term price weakness.

The views and opinions expressed here are solely those of the author and practise not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should deport your own research when making a conclusion.