• Coin Market Cap
  • Contact Us
  • Privacy & Policy
Friday, February 26, 2021
Litecoin.is
  • Home
  • Litecoin
  • Bitcoin
  • Blockchain
  • Coin Market Cap
  • Exchange
  • ICO
No Result
View All Result
  • Home
  • Litecoin
  • Bitcoin
  • Blockchain
  • Coin Market Cap
  • Exchange
  • ICO
No Result
View All Result
Litecoin.is
No Result
View All Result
Home Bitcoin

Ether Looks Overleveraged as Cryptocurrency Hits New High Over $1,900

February 18, 2021
in Bitcoin
0
Ether Looks Overleveraged as Cryptocurrency Hits New High Over $1,900
189
SHARES
Share on FacebookShare on TwitterPin it

Related articles

Libra Co-Creator’s VC Firm Co-Leads $12M Round in ‘Decentralized GitHub’

Libra Co-Creator’s VC Firm Co-Leads $12M Round in ‘Decentralized GitHub’

February 18, 2021
How Crypto Transforms Prediction Markets

How Crypto Transforms Prediction Markets

February 18, 2021
ADVERTISEMENT

Ether soared to new record highs Thursday, but an overheated derivatives market may suggest higher volatility is on the way for the short term. 

The second-largest cryptocurrency by market value set the new lifetime high of $1,928 soon before press time, having first breached the previous peak of $1,821.49 reached on Feb. 13 early today, according to CoinDesk 20 data. 

In the derivatives market, the average level of the “funding rate” across major exchanges offering ether perpetuals (futures with no expiry) has risen sharply from 0.069% – just short of the early January record high of 0.21%, according to data source Glassnode. 

“It shows the derivatives market is overleveraged,” Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, told CoinDesk. “With this current structure, I do not feel comfortable in running a lot of long exposure.” 

The funding rate is calculated every eight hours and represents the cost of holding long positions. When perpetuals trade at a premium to spot price, the funding rate is positive (longs pay shorts). Hence, a very high funding rate is considered a sign of leverage being excessively skewed to the bullish side (overbought conditions) and often injects volatility into the market. 

Ether: Average funding rate
Source: Skew

In such situations, holding longs at high costs is attractive only if the bullish momentum remains strong. A pullback or consolidation can trigger an unwinding of longs, leading to a more profound price drop and a pick-up in price volatility. As of press time, ether is showing no signs of price congestion.

However, the case for a continued steep rally looks weak, with spot market volumes falling on major exchanges such as Coinbase.

Ether daily chart
Source: TradingView

With the 10-day moving average of daily volume trending south, there’s a question mark on the sustainability of recent gains. A low-volume price rise is often short-lived. 

That said, a pullback, if any, could be shallow and brief, as on-chain fundamentals are biased bullish. 

The number of coins held on exchanges has declined by 10% to 20.77 million in the past three months, according to data source CryptoQuant. It shows investors are either taking direct custody of coins or staking them into decentralized finance protocols, creating a sell-side liquidity shortage. 

Ether exchange reserves (number of balances held in exchange addresses)
Source: CryptoQuant

“In the long-run, [the] ETH rally would keep going as long as ETH holdings in all exchanges are decreasing,” Ki-Young Ju, CEO of CryptoQuant, told CoinDesk. 

Other metrics also paint a bullish picture. For instance, the 90-day average of active addresses on Ethereum’s network has increased to a new lifetime high of around 450,000, surpassing the 2017 peak, according to Glassnode.  

Ethereum: 90-day average of active addresses
Source: Glassnode

“When there’s greater usage, there’s more demand for the cryptocurrency, and that drives the price up,” Philip Gradwell, chief economist at the blockchain intelligence firm Chainalysis, told CoinDesk.

Also read: Ethereum’s Favorite Lossless Lottery Will Airdrop Its POOL Token Today 


Credit Source link

Share76Tweet47Pin17
ADVERTISEMENT

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Bitcoin needs clear regulations to be less volatile, Bridgewater analyst says

Bitcoin needs clear regulations to be less volatile, Bridgewater analyst says

February 26, 2021

Bitcoin price nears $44K as large Coinbase outflows fail to stop the sell-off

February 26, 2021

Kraken seeks $10B+ valuation in new funding round: Report

February 26, 2021

Crypto leaders back MIT’s four-year initiative to harden Bitcoin’s security

February 26, 2021

Grammy-winning producer Illmind auctions rights to new samples as NFT

February 26, 2021

Focus on DeFi ‘fairness’ benefits Holochain, Orion Protocol and Dodo

February 25, 2021
Litecoin.is

Litecoin.is an online NEWS portal which aims to provide the latest trendy news around the crypto market and much more exciting stuff.

Topic to cover

  • Bitcoin
  • Blockchain
  • Litecoin

Whats NEW here?

  • Bitcoin needs clear regulations to be less volatile, Bridgewater analyst says
  • Bitcoin price nears $44K as large Coinbase outflows fail to stop the sell-off
  • Kraken seeks $10B+ valuation in new funding round: Report

  • Coin Market Cap
  • Contact Us
  • Privacy & Policy

© 2019 Litecoin.is – All about Litecon NEWS and more!

No Result
View All Result
  • Home
  • Litecoin
  • Bitcoin
  • Blockchain
  • Coin Market Cap
  • Exchange
  • ICO

© 2019 Litecoin.is All about Litecoin And Crypto News!.

  • bitcoinBitcoin(BTC)$46,744.00-7.91%
  • ethereumEthereum(ETH)$1,481.54-8.95%
  • rippleXRP(XRP)$0.433075-8.44%
  • eosEOS(EOS)$3.63-9.13%
  • litecoinLitecoin(LTC)$171.97-12.18%
  • bitcoin-cashBitcoin Cash(BCH)$483.69-11.58%
  • tetherTether(USDT)$1.01-0.03%
  • stellarStellar(XLM)$0.378474-8.88%
  • Binance CoinBinance Coin(BNB)$225.53-9.91%
  • tronTRON(TRX)$0.045025-8.49%
  • cardanoCardano(ADA)$1.116.02%
  • Bitcoin SVBitcoin SV(BSV)$179.76-8.54%
  • iotaIOTA(MIOTA)$1.10-8.92%
  • moneroMonero(XMR)$206.54-3.31%
  • dashDash(DASH)$214.54-11.06%
  • neoNEO(NEO)$38.05-9.13%
  • ontologyOntology(ONT)$0.90-10.07%
  • nemNEM(XEM)$0.520.14%
  • zcashZcash(ZEC)$119.98-11.69%
  • USD CoinUSD Coin(USDC)$1.010.00%
  • dogecoinDogecoin(DOGE)$0.050839-8.25%
  • bitcoin-goldBitcoin Gold(BTG)$25.35-9.70%