There is a good chance that the main Ethereum token could once again reach and surpass the $4,870 all-time-high level experienced less than three weeks ago, but there are strong doubts among investors about how long this rally might last. Could this really be a good time to buy Ether (ETH) and other Ethereum-based tokens?
Ether Derivatives Trading
The most recent data from Ether data provider Etherscan reveals a number of ether derivatives traded in May 2018. ETH/USD trading interest (as measured by volume) increased by 3.6% week-on-week to hit $2,788 million in the week ending May 11.
The trading of Ether-based derivatives is dominated by short contracts, which are most often used by investors interested in betting on the direction of ETH price movements. The most active contracts trading on the ETH/USD pair in May 2018 were the Simple Capped Ethereum Short (9.5%), Simple Capped Ethereum Long (16.5%), Simple Future Ethereum (9.3%), Simple Future Ethereum Long (9.3%) and ETH/USD Short Call (6.9%). The total value of short contracts totaled $1,908.7 million at the time.
The ETH/USD Bitfinex pair was trading at around $4,717 at the end of November, slightly down from a fresh high of $4,780. The $4,000 handle might be acting as strong support for ETH. Even if there is a minor sell-off, the digital currency remains inside a trading range that indicates a neutral sentiment in the market.
Despite the market’s bearish move, Ethereum remains inside the boundaries of its trading range. In the past few weeks, however, ETH price has started to see some short-term price fluctuations, which indicates buyers could be waiting for a break of this support level. If this support level breaks, Ethereum might see further declines towards its previous support area. As Ethereum sees a trading range that indicates neutrality, there is no fundamental reason for its value to drop. In fact, it is quite likely the digital currency will soon see some short-term bullish pressure. This could be explained by the fact ETH is currently the second most traded cryptocurrency after Bitcoin, but we still have all of December and a possible Santa Claus rally to see whether the current rally will hold.