Although the prices of cryptocurrency went through a correction recently, the move will be pretty short-term for assets like Ethereum and Bitcoin. Also, the move doesn’t reflect the macro-level events that help in painting the picture regarding such crypto assets. In the last month, the price of Ether increased 96%- shifting from $2,138 to $4,200 on the 11th of May.
Usually, the assumption would be highlighted further that every single trader was pretty consumed with elation- something that would lead to the funding rate moving through record highs on the futures contracts of the cryptocurrency.
Plummeting Price Of Ethereum A Major Concern For Traders
Yet, that was not what happened. The rate of funding started to plummet from the 18th of April- and currently, there is no way of increasing the leverage of the buyers. This situation is quite similar to the one that took place on the 3rd of April when Ethereum moved up 43% to an all-time high of $2,150.
Usually, such movements highlight the excessive leverage that is used by retail traders throughout the market. In the meantime, arbitrage desks and whales started using their fixed-month future contracts which would help in avoiding oscillations in the funding rates.
The price did swing negatively on the 17th of April by 19%, which led to around $1 billion worth of contract liquidations amongst long futures. This did crush the morale of every Ethereum bull out there- regarding positions that were built through leverage.
As it usually goes through the cryptocurrency sector, most retail traders are usually more into taking longer periods of time that would help them recover from unexpected losses. But this time around, most of the pro traders can’t shake off that feeling of nervousness regarding the precarious position of Ethereum.