For years, Ether bulls have demanded $5,000 Ethereum and now derivatives data shows that the price is finally achievable. Since 2018, Ethereum (ETH) experts have been claiming that the $5,000 price has been ‘programmed,’ with some even predicting a long-term price of $20,000.
A part of these optimistic calls are predicated on ETH 2.0 staking and EIP-1559-induced lower inflation. The $20,000 estimate equates to a market value of $2.36 trillion, and even if it is conceivable, it appears to be overly optimistic at this time.
On September 20, Ether entered an ascending channel, indicating that $5,000 would become a support level by late November. The net value locked growth, or adjusted TVL, on the Ethereum network smart contracts is supporting the recent rise. Lending protocols and DEX exchanges are frequently at the forefront of TVL, which measures the assets deposited on decentralized apps.
On Oct. 16, Ether’s TVL surpassed the previous all-time high of $71 billion, collecting a 50% increase in three months till Oct. 31.
Eth/USD 1 Day Chart: Source – Tradingview.com
In addition, the US Commodity Futures Trading Commission launched an inquiry into Polymarket, a decentralized prediction market located in New York, in October (CFTC). The agency is reviewing whether the decentralized finance (DeFi) program allows its consumers to trade binary options and swaps without the need for regulator clearance, according to a Bloomberg article on Oct. 23.
Some investors, on the other hand, believe that favorable action in conventional markets will help to fuel the surge. Since 1985, November has been the highest performing month for the S& P 500.
Monitor the monthly contract’s premium, often known as “basis,” to ensure investors’ trust in the $5,000 prophesies coming true. These fixed-calendar futures, unlike the perpetual contract, do not have a funding rate, hence their pricing will be very different from conventional spot markets.
A trader can determine the extent of bullishness in the market by comparing the expenditure difference between futures and the normal spot market. The three-month futures contract will trade at a 15 percent or greater annualized premium if there is excessive buyer confidence (basis).
On 10th Nov., Ethereum reached an all-time high of $4859 USD, and the 25 percent delta skew may be used to gauge how hopeful traders are. By comparing equivalent call (buy) and put (sell) options side by side, this indicator delivers a valid “fear and greed” analysis.
When the premium for neutral-to-bearish put options is larger than the premium for similar-risk call options, the measure becomes positive. This is sometimes referred to as a “fear” scenario. A negative skew, on the other hand, indicates that the cost of upward protection is higher, indicating that the market is bullish.
Both derivatives indicators are on the cusp of a neutral-to-bullish zone, which is a very favorable sign since it allows purchasers to leverage derivatives instruments.
Perma-bulls predicting $5,000 are likely to be accurate in the short run, according to futures and options measurements.