Ethereum
$4,119.03 0.68%
ETH · 1w

Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval

The price of Ether (ETH) is lagging Bitcoin's (BTC) price action by 13% in October, but is this relevant? To date, the altcoin has still outperformed BTC by 274% in 2021. However, traders tend to be short-sighted and some will question whether the Ethereum network can successfully migrate to proof of stake (PoS) validation and finally solve the high gas fees issue.

Bitcoin and Ether prices at Bitstamp. Source: TradingView

Moreover, the increasing competition from smart contract networks like Solana (SOL) and Avalanche (AVAX) have been worrying investors:

According to Cointelegraph, the recent speculation over the possible approval of a Bitcoin exchange-traded fund (ETF) raised traders' appetite for BTC. The U.S. Securities and Exchange Commission (SEC) is expected to announce its decision on multiple ETF requests over the next couple of weeks. However, it remains a possibility that the regulator will postpone these dates.

Pro traders are unfazed by the recent price stagnation

To determine whether professional traders are leaning bearish, one should start by analyzing the futures premium — also known as the basis rate. This indicator measures the price gap between futures contract prices and the regular spot market.

Ether's quarterly futures are the preferred instruments of whales and arbitrage desks. These derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, but their most significant advantage is the lack of a fluctuating funding rate.

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

The three-month futures typically trade with a 5% to 15% annualized premium that follows the stablecoin lending rate. By postponing settlement, sellers demand a higher price, and this causes the price difference.

As depicted above, Ether's failure to break the $3,600 resistance has not caused a shift in pro traders' sentiment because the basis rate remains at a ...

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