The week has not been so smooth for Ethereum as its price could not hold at the $600. But this has nothing to do with its performance, the fundamentals of the network and cryptocurrency cannot be hacked; it is still substantial.
Even though there has been increased buzz with Ether’s price, its price is still way better than it was. It has risen to be 45% higher than its price from the previous month.
Many metrics affect the performance of the Ethereum network in general. Gauging the metrics will help the recent correction means, whether it is a temporary consolidation or just a lack of adoption. Some of the signals to paying attention to include:
Analyze transactions and transfer value
The transactions level and transfer level can help you gauge the performance of the currency. You can be able to check if there is growth or not. For example, from the transactions and transfers in November, you can learn that even though Ether could not break $600, it still has a lot of activity. This shows that there is a lot of blockchain activity, an indicator of better performance.
An increase in withdrawals from exchanges communicates many things such as staking, yield farming, and users sending coins to cold storage. When there is an increase in net deposits flow, it shows many are willing to sell in the short term.
From Ethereum charts, there has been so much outflow from exchanges from August that lasted three months. That led to 4.3 million pulled out from exchanges. The move reduced from mid-November, showing that investors are willing to reduce their short-term positions just when ETH surpassed $420.
As from Dec 5th, it has hard a dark path as its performance started going down. There was a fall in the level of deposits in exchanges. In a period of one week, Ether withdrawals were higher than deposits by 32,000 Ether.
Normalizing futures premium
In the normal trading scene, professional traders maximize long-term futures contracts with end dates. That means as a trader; you can know the bullishness level of a currency by comparing the futures versus the spot market.
To know if the market is bullish, the average of three-month futures should be 1.5% or higher than spot exchanges. If the situation is the reverse, it shows the market is bearish.
As for the recent Ether performance, Ether has shown 2.5% higher, and upon dropping, it still attained a minimum of 1.5% threshold. That is an indicator that Ether is still bullish.
Spot volume recovery
One of the best ways to know the performance is by tracking the spot market volume. When the currency breaks the resistance level on low volumes, it lacks confidence in the market. That means that a high trading volume is the only one that will compensate and lead to significant price changes.
The recent trading volumes are below average despite highly resisting the $600 level. As of mid-November, the daily average volume was about $900 million, which is a positive indicator.
Options put/Call ratio
You can measure the market performance by checking the buying (call) and selling (buy) options. High call options are an indicator of a bullish market while selling options shows a bearish market.
As Ether moves to $600, it increased the put-to-call ratio, which shows a bullish trend. So far, the ratio is at 0.95.
The increase of Ether’s price by 45% a month ago made investors buy more, which shows a neutral-to-bearish option strategy.