• Ethereum price has retreated this week as the put/call ratio on Deribit has risen.
• The put to call ratio is an essential tool that traders and investors use to predict whether an asset will rise or not.
• Data shows that Ethereum’s put/call ratio has edged upward slightly in the past few days.
Ethereum prices have been on a rollercoaster ride over the past few weeks, and this week was no exception. As the rally of the cryptocurrency cooled off, Ethereum prices retreated on Thursday as the put/call ratio on Deribit rose.
The put to call ratio is an important metric in the options market. It measures the ratio of traders who are placing put trades and those who are placing call trades. A put gives the trader the right to sell while a call gives them the right to buy. A lower ratio is usually preferred since it means that there are more buyers in the options market.
Data compiled by The Block shows that Ethereum’s put/call ratio has edged upward slightly in the past few days. The ratio has now risen from 0.24 on January 4 to a high of 0.3. This indicates that traders and investors are not as bullish as they were previously and may be a sign that Ethereum prices could be headed for a retracement.
In addition to the rising put/call ratio, data from CoinGlass shows that the number of short liquidations in key exchanges rose to the highest point in two weeks. This could be attributed to the weak corporate earnings from the United States, which has put a damper on the spectacular crypto comeback over the past week.
Overall, Ethereum prices have pulled back to $1,500 on Thursday, a decrease of over 5.90% from its highest point this year. It remains to be seen whether this is a temporary setback or the start of a larger correction. With the put/call ratio edging upwards, traders and investors should be wary of any further downside risks.