ETH rebounds, futures stabilize after flash crash, and market sentiment is indicating a solid run to the $4,500 resistance.
On Sunday, ETH regained its lost position at $4,100 after a harsh flash crash of 20.7 per cent on Friday. A total of $3.82 billion in liquidations were caused by the crash and this significantly shook up the ETH derivatives markets.
Regardless of this, the recovery of the support of 3,750 suggests that the short-term correction might be over.
Interestingly, the rate of funding on ETH perpetual futures has gone down to -14, such that bearish traders are paying to hold positions.
This unstable relationship is symptomatic of concerns about market makers’ or solidarity exchanges’ solvency. Traders are quite wary and are starting to pick up confidence in the derivatives markets returning to normal.
Futures Markets Signal Stability
In the case of the monthly ETH futures, the neutral premium was recovered shortly after the crash, an indication that distortions that had been generated before the crash were a result of insufficient product design rather than negative sentiment.
Deribit options markets show equal demand of both the bullish and bearish strategies, with the put options slightly inferior to the calls. This is an indication of a healthy derivatives market with no indication of coordinated crashes.
With the situation around exchange reimbursements shrouded in doubt (Binance has already committed up to 283 million dollars), the market is stabilizing.
The decline in wrapped tokens and synthetic stablecoins decreased the margins of the traders in the short term, yet the shock was taken quickly.
ETH Overtakes Competitor Altcoins.
Following the crash, ETH was relatively strong in comparison to others like SUI, Avalanche, and Cardano, which experienced much more intraday losses.
In the last 48 hours, ETH has plunged by a mere 5% and the majority of the alternative cryptocurrencies remain at least 10% lower than prior to the crash.
This decoupling highlights the leading role of ETFs, in the hands of $23.5 billion in spot ETFs and open interest in options markets, totaling 15.5 billion. Even new entrants such as Solana are not able to match the strength and institutional attractiveness of Ether.
Outlook: Poised For $4,500 Challenge
With confidence back in the derivatives market, the ETH is set to encounter the resistance level of $4,500.
The normalized futures and absence of bearish stress in options are encouraging futures values.
The ability to survive a market crunch is another indicator of ETH as the altcoin of choice among institutional investors.
The road to $4,500 is becoming more probable with traders finding their feet in this tumultuous market.
