Decline In Ethereum Futures On CME Suggests Institutional Investors Are Still Bearish


Institutional investors have been bearish towards Ethereum for a while now. There were outflows rocking digital assets until it ended its 11-week streak of inflows last week. However, this does not mean that positive sentiment has fully returned to the cryptocurrency again. Figures from the Chicago Mercantile Exchange show that institutional investors remain cautious and even bearish towards the second largest cryptocurrency in the market.

Ethereum falls into the negative

Ether futures on the Chicago Mercantile Exchange have been trading on a negative basis recently, which basically means that it is trading below the spot price. This has caused the ether futures contract to drop to its lowest levels since its inception.

The open interest denominated in ether on the Chicago Mercantile Exchange had previously claimed a new all-time high in April. But since then, it has continued to decline, with more declines recorded over the past weekend. This has resulted in a bad streak for June.

Related reading | Outflows rock bitcoin as institutional investors pull the plug, more downside to come?

As the month draws to a close, the three-month basis of Ether has decoupled from Bitcoin and traded below, which was recorded on June 23. Hence, this is the first time that the basis of the ether has fallen so low.

Ethereum institutional investors

ETH futures on CME in decline | Source: Arcane Research

Asset managers have now moved into a dominant bearish position after that. It has been recorded that it has been short on Ethereum since mid-June when it reached $37 million. This number has since decreased, but only slightly, to the $32 million recorded last week. Ether futures basis is at -2.33% while Bitcoin remains at 0.63%.

ETH is struggling to get $1,000

The downtrend towards Ethereum was not only shifted to institutional investors. Spot markets are also feeling the pressure as selling resumed. In light of this, the digital asset has struggled to hold the $1,000 level.

Ethereum price chart from TradingView.com

ETH struggles to hold above $1,000 | Source: ETHUSD on TradingView.com

This level is important for Ethereum as there is increasing support here. However, it is a very important technical level considering that if the price drops below this point, resistance will quickly build up around it. Any support below $1,000 is incredibly weak, so a dip from here is likely to bring the price to $800 before any recovery occurs.

Related reading | Ethereum 11-Week Bleed Sockets, Why $1,500 Might Be on the Sight

Ethereum is now trading solidly below the 20-day moving average which has wiped out all hopes of a bullish recovery in the short term. In addition, with the focus on 3AC liquidation, the implications for digital assets like ETH remain very negative.

Featured image from Admiral Markets, charts from Arcane Research and TradingView.com

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