Derivatives data shows that Ether (ETH) traders are feeling less bullish when compared to Bitcoin (BTC). Even though the altcoin captured a nearly 200% gain in the first half of 2021 versus Bitcoin’s modest 22% price increase, traders seem to be more affected by Ether’s recent underperformance.
Institutional flow also backs the decreased optimism seen in Ether derivatives, as ETH investment vehicles suffered record outflows this past week while Bitcoin flows began to stabilize. According to data from CoinShares, Ether funds experienced a record outflow of $50 million this past week.
Take notice of how Ether is underperforming Bitcoin by 16% in June. The London hard fork is scheduled for July, and its core proposal — dubbed as EIP-1559 — will cap Ethereum’s gas fees. Therefore, the price action could be related to unsatisfied miners as the network migrates out of Proof-of-Work (PoW).
For this reason, Ether investors have reason to fear because uncertainties abound. Perhaps miners supporting a competing smart-contract chain or some other unexpected turn of events could further negatively impact Ether price.
Whatever the rationale for the current price action, derivatives indicators are now signaling less confidence when compared to Bitcoin.
Ether’s December futures premium shows weakness
In healthy markets, the quarterly futures should trade at a premium to regular spot exchanges. In addition to the exchange risk, the seller is ‘locking up’ funds by deferring settlement. A 4% to 8% premium in the December contracts should be enough to compensate for those effects.
A similar effect occurs in almost every derivatives market, although cryptocurrencies tend to present higher risks and have higher premiums. However, when futures are trading below this range, it signals that there is short-term bearish sentiment.
The above chart shows…