Ethereum, the world’s second-largest cryptocurrency, is likely to reach $3k if you look at recent price trends. However, Ethereum’s derivatives including futures and options show that such a move is not as likely as the trading trend may suggest.
Ethereum is currently trading slowly as compared to Bitcoin and has lagged behind the largest cryptocurrency as a trend setter. This is despite record-breaking earlier performance that saw it propel to new heights and get above $4k, outperforming Bitcoin for several months. However, Ethereum also fell harder than Bitcoin when the short-term bear market arrived and brought Bitcoin below $35k and Ethereum below $2k.
The recent rise of Ethereum is being seen with cautious optimism. According to a recent outlook, traders are eyeing the latest “London fork” with cautious optimism. The much-talked deflationary mechanism envisioned by the latest update might bring in new speculation around the cryptocurrency.
However, Ethereum derivatives, especially Futures show a different picture. Despite the recent rise in prices, Ethereum’s premium is still only 1.8% and that is not a lot. The amount of premium shows how derivative holders are betting on the future of the underlying asset, in this case, Ethereum itself. The premium hit negative levels when the index went below $2k to as low as $1.75k at one point. Now it has increased to positive percentage points but not by a lot. So, it appears like derivatives traders are still quite skeptical of the new update and do not see it as a big deal as the traders or perhaps the developers are making it out to be. It has to be mentioned that derivatives trends do not always determine the outlook of the underlying asset but they can show some statistical sentiment around it.
Ethereum is at an important juncture of its future. The latest London fork can make or break its long-term plans for scaling, deflationary initiatives and transaction costs. But, it can also mean that the network is trying too many new things at once and not adopting any long-term stance. Only time can tell where Ethereum can go in the long-term but at least in the short-term, it is likely to reach $3k in the near future if Bitcoin keeps rising.
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