DCG

DCG losses top $1B on the back of 3AC collapse in 2022

The crypto conglomerate reported that falling crypto prices and the fallout from Three Arrows Capital’s loan default to Genesis affected its results.

Cryptocurrency venture capital conglomerate Digital Currency Group (DCG) has reported losses of over $1 billion in 2022 due largely to the contagion relating to the collapse of the crypto hedge fund Three Arrows Capital (3AC).

DCG reportedly lost $1.1 billion last year, according to its Q4 2022 investor report, and said the results “reflect the impact of the Three Arrows Capital default upon Genesis” along with the “negative impact” from falling crypto prices.

Genesis is the lending arm of DCG and the firm filed for Chapter 11 bankruptcy in late January. Genesis is 3AC’s largest creditor, as the company loaned the now-bankrupt hedge fund $2.36 billion. 3AC filed for bankruptcy in July 2022.

DCG’s fourth-quarter losses came to $24 million, while revenues came in at $143 million.

Full-year 2022 revenues for DCG came in at $719 million. The firm held total assets of $5.3 billion with cash and liquid holdings of $262 million and investments — such as shares in its Grayscale trusts — amounted to $670 million.

The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business Foundry Digital.

Its equity valuation came in at $2.2 billion with a price per share of $27.93, which the report said was “generally consistent with the sector’s 75%-85% decline in equity values over the same period.”

DCG declared on Nov. 1, 2021, that its valuation was more than $10 billion, following the sale of $700 million worth of shares to companies like Alphabet Inc., Google’s parent company.

However, the company said it “hit a milestone” with the restructuring of Genesis.

The agreement proposed earlier in February would see DCG contribute its equity share in Genesis’ trading entity and bring all Genesis entities under the same holding company and see its trading entity sold off.

DCG would also exchange an existing $1.1 billion promissory note due in 2032 for convertible preferred stock. Its existing 2023 term loans with an aggregate value of $526 million would also be refinanced and made payable to creditors.

A Genesis creditor said the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for those owed money by the firm.

DCG offloads Grayscale shares to raise capital: Report

The purported sales are the latest measures the embattled firm has taken following moves in recent months to raise capital and preserve liquidity.

Cryptocurrency conglomerate Digital Currency Group (DCG) has reportedly begun to sell its holdings in crypto funds managed by its subsidiary Grayscale Investments as it looks to raise capital and preserve liquidity.

According to a Feb. 7 Financial Times report citing United States securities filings, DCG sold around a quarter of its shares in Grayscale’s Ether (ETH)-based fund for around $8 per share, despite each share holding a claim to nearly double that amount in ETH.

*The market price per share (gray) vs holdings per share (green) of the Grayscale Ethereum Trust (ETHE). Source:* *Grayscale*

It’s also said to have sold down small share parcels in Grayscale’s Litecoin (LTC), Bitcoin Cash (BCH) and Ethereum Classic (ETC)-based trusts in addition to its Digital Large Cap Fund — which combines Bitcoin (BTC), Ether, Polygon (MATIC), Solana (SOL) and Cardano (ADA) in a single fund.

When asked about the share sales, DCG was quoted as saying that it O“is simply part of our ongoing portfolio rebalancing.”

Despite that statement, some observers believe Barry Silbert’s DCG may be headed toward financial strife.

Another one of its subsidiaries — crypto lending firm Genesis Global Capital — filed for bankruptcy on Jan. 19 and is believed to owe creditors over $3 billion.

Companies owned by DCG have been severely affected by the contagion resulting from FTX’s implosion, with over 500 employees laid off in recent weeks.

However, DCG has taken a number of steps to preserve liquidity in 2023, such as announcing to its shareholders in a Jan. 17 letter that it would be halting its quarterly dividend payments as it looks to strengthen its balance sheets.

DCG has also sought the help of financial advisory firm Lazard to help it weigh up options to sell crypto media outlet CoinDesk — another of its subsidiaries — after it claimed to have received offers for the outlet exceeding $200 million.

Grayscale, Genesis and CoinDesk are among some 200 crypto-related businesses in DCG’s venture capital portfolio, according to its website. DCG also has equity in other companies, including the crypto exchange Luno and advisory firm Foundry.

Genesis creditors to expect 80% recovery under proposed restructuring plan

Digital Currency Group (DCG) plans to hand its equity stake in Genesis’ trading arm to Genesis Global, which will then be sold, pending court approval.

A Genesis creditor has revealed the new proposed restructuring plan between Genesis, Digital Currency Group and creditors will see creditors getting back at least 80% of their funds.

On Feb. 6, Genesis Global announced it reached an “agreement in principle” with Digital Currency Group (DCG) and its creditors, which will eventually see its crypto trading and market-making arm sold as part of restructuring efforts.

DCG would contribute its share of equity in Genesis Global Trading — Genesis’ brokerage subsidiary business — to Genesis Global Holdco, the holding entity for Genesis.

The transaction would bring all Genesis-related entities under the same holding company.

The terms of the agreement will see DCG exchanging an existing $1.1 billion promissory note due in 2032 for convertible preferred stock. It will also refinance its existing 2023 term loans with an aggregate value of $526 million and make them payable to creditors.

The agreement will also see crypto exchange Gemini contribute $100 million for its Gemini Earn users who have funds frozen with the bankrupt firm.

Pending the close of these transactions, which need the necessary court approval, Genesis will seek to put its then-owned Genesis Global Trading entity up for sale.

UPDATE: DCG/Genesis creditors have been told to expect capital returns of 80%.

**beyond that number depends on a convertible preferred equity note and “realized liquidation prices” based on DCG/Genesis assets.

— Andrew (@AP_Abacus) February 6, 2023

A Feb. 6 user update from the Genesis creditor and crypto yield platform Donut said the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for Genesis creditors.

It added the recoverable amount depends on the “equity note, realized liquidation prices and considers the unknown costs associated with the remainder of this bankruptcy.”

Genesis is currently restructuring as part of its Chapter 11 bankruptcy proceedings stemming from a liquidity crisis in November brought on by the bankruptcy of crypto exchange FTX.

Genesis Global Trading was not included in the company’s Chapter 11 filing at the time, with Genesis Global Holdco saying the business would “continue client trading operations.“

At an initial bankruptcy hearing in January, Genesis lawyers said that the firm was looking for a quick resolution to its creditor disputes and expressed optimistic that the company would come out of Chapter 11 proceedings by late May.

Ethereum (ETH) price is aiming for $1,800 in February — Here is why

ETH price is finding support at $1,560 and multiple data points are beginning to hint at a possible rally to $1,800 before the end of February.

Ether (ETH) has been struggling with the $1,680 resistance since Jan. 20. Still, the ascending triangle pattern and improvements in investor sentiment in ETH derivatives provides hope that Ether price could reach $1,800 or higher by the end of February. This, of course, depends on how the Ether price behaves as it reaches the pattern deadline by mid-February.

*Ether/USD price index, 12-hour. Source: TradingView*

From one side, traders are relieved that Ether is trading up 33% year-to-date, but the repeated failures to break the $1,680 resistance coupled with negative newsflow might give bears the power to cancel the bullish triangle pattern.

According to a Jan. 30 report from Axios, New York State’s Department of Financial Services is reportedly investigating cryptocurrency exchange Gemini over claims that the firm made regarding assets in its Earn lending program. The suspicions followed reports that multiple Gemini Earn users believed their assets had been protected by the Federal Deposit Insurance Corporation (FDIC).

On Jan. 12, the U.S. Securities and Exchange Commission charged the Gemini exchange with offering unregistered securities through Earn. In addition, Gemini co-founder Cameron Winklevoss has claimed that Genesis and DCG owe $900 million to Gemini’s clients.

Several United States senators have reportedly penned a letter requesting answers from Silvergate Bank, according to a Jan. 31 Bloomberg report. The policymakers were not fully satisfied with the bank’s previous answers about its alleged role in handling FTX user funds. Silvergate reportedly cited restrictions on disclosing “confidential supervisory information.”

On the bright side, Ethereum Foundation developer Parithosh Jayanthi announced that the “Zhejiang” public testnet will be launched on Feb. 1. The implementation will allow staked Ether withdrawal on a test environment so that validators can anticipate the proposed changes for the Shanghai hard fork.

Let’s look at Ether derivatives data to understand if pro traders are frustrated by the recent price rejection at the $1,680 level.

ETH’s futures premium has failed to enter the FOMO area

Retail traders usually avoid quarterly futures due to their price difference from spot markets. Meanwhile, professional traders prefer these instruments because they prevent the fluctuation of funding rates in a perpetual futures contract.

The annualized two-month futures premium should trade between 4% and 8% in healthy markets to cover costs and associated risks. When the futures trade at a discount versus regular spot markets, it shows a lack of confidence from leverage buyers, which is a bearish indicator.

*Ether 2-month futures annualized premium. Source: Laevitas*

The above chart shows that traders using future contracts have failed to enter the neutral-to-bullish 4% threshold. Still, the current 3.5% premium denotes a moderate sentiment improvement compared to two weeks prior, but that does not mean traders expect an immediate positive price action.

For this reason, traders should analyze Ether’s options markets to understand how whales and market makers are pricing the odds of future price movements.

Options traders are comfortable with downside risk

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.

In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 10%. On the other hand, bullish markets tend to drive the skew indicator below -10%, meaning the bearish put options are discounted.

*Ether 60-day options 25% delta skew: Source: Laevitas*

The delta skew has stabilized near 0% in the last two weeks, signaling that Ether options traders held a neutral sentiment. That is particularly intriguing since ETH gained 10% on Jan. 20 — indicating pro traders are pricing similar upside and downside risks.

Ultimately, both options and futures markets point to whales and market makers not comfortable with adding leverage longs, but at the same time, not worried if the $1,570 ascending channel support breaks.

Traders will watch to see if Ether bulls are able to keep the price within the bullish triangle formation for the next two weeks, but if the macroeconomic environment allows, ETH derivatives point to a potential rally toward $1,800.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Genesis eyes fast resolution to creditor disputes and bankruptcy exit in May

A lawyer for Genesis is optimistic the crypto lending firm can resolve creditor disputes before the week is out and exit bankruptcy proceedings within four months.

A lawyer for bankrupt crypto lending firm Genesis is optimistic the firm can resolve its creditor disputes as early as this week and the company could come out of Chapter 11 proceedings by late May.

Genesis’ lawyer, Sean O’Neal, made the comments at a Jan. 23 initial hearing at the United States Bankruptcy Court for the Southern District of New York, according to a Reuters report.

He added Genesis had “some measure of confidence” it would resolve disputes with creditors by the end of the week. If needed it would look for the judge to install a mediator, he said, adding:

”Sitting here right now, I don’t think we’re going to need a mediator. I’m very much an optimist.”

Genesis filed for Chapter 11 bankruptcy on Jan. 19. At the time it already had a restructuring plan along with a path pursuing a “sale, capital raise, and/or an equitization transaction” so it could potentially “emerge under new ownership.”

The bankruptcy comes nearly two months after Genesis suspended withdrawals in November, citing market turbulence caused by the bankruptcy of crypto exchange FTX.

A series of “first-day” motions, standard in bankruptcy proceedings, were granted by Judge Sean Lane, including allowing the firm to pay employees and vendors.

Lane added that Genesis did not need to reveal customer names on its creditors’ list, citing privacy concerns. Lane even suggested the lender warn users about possible phishing scams if the names are later made public.

Genesis said it will sell its assets at auction with a plan to exit its bankruptcy in a little under four months on May 19.

It reported having just over $5 billion in assets and liabilities and owes over 100,000 creditors at least $3.4 billion. Genesis’ withdrawal suspension last year impacted users of a yield-bearing product it managed called “Earn” from the Gemini exchange.

Gemini is Genesis’ largest creditor and is owed nearly $766 million.

Its largest debtor was its parent company, Digital Currency Group (DCG), which owes Genesis around $1.65 billion — $575 million of loans due in May and a $1.1 billion promissory note maturing in 10 years’ time.

Even though DCG is facing its own financial troubles, the bankruptcy did not include DCG. Similarly, the Genesis entities handling derivatives, spot trading, broker-dealer and custody are not part of the proceedings and are continuing operations, according to Genesis.

SEC’s ‘one-dimensional’ approach is slowing Bitcoin progress: Grayscale CEO

Grayscale’s chief was the latest to take a swing at the authority for its so-called “regulation by enforcement” actions.

The approach to crypto regulatory enforcement by the United States Securities and Exchange Commission (SEC) has stalled the advancement of Bitcoin (BTC) in the country, according to the CEO of Grayscale Investments.

In a letter published in The Wall Street Journal on Jan. 23, the chief of the cryptocurrency asset management firm, Michael Sonnenshein, said he agreed with an assertion that the SEC was “late to the game” regarding crypto regulation and preventing the bankruptcy of FTX, adding:

“‘Late’ doesn’t capture what transpired here. The problem is the Securities and Exchange Commission’s one-dimensional approach of regulation by enforcement.”

Grayscale is currently suiting the SEC for denying the conversion of its Bitcoin trust to a spot-based exchange-traded fund (ETF).

He clarified the SEC “should certainly try to eliminate bad actors” but it shouldn’t hinder “efforts to develop appropriate regulation.”

Doing our part to re-instill trust and confidence in #bitcoin and #crypto cc @Grayscale @CraigSalm @jenn_rosenthal $GBTC pic.twitter.com/u72RHmGTmJ

— Sonnenshein (@Sonnenshein) January 23, 2023

The inaction by the regulator to stop such bad actors from entering the crypto industry “prevented Bitcoin’s advancement into the U.S. regulatory perimeter,” Sonnenshein wrote.

This has forced American investors to use offshore crypto businesses “with less protection and oversight,” he said.

“We are seeing the consequences of the SEC’s priorities play out in real-time — at the expense of U.S. investors.”

Cointelegraph has reached out to the Securities and Exchange Commission for comment.

Sonnenshein’s opinion piece comes as Grayscale is suing the SEC for having “arbitrarily denied” Grayscale’s plans to convert its Grayscale Bitcoin Trust (GBTC) to a spot ETF.

The SEC argued that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. Grayscale countered by saying that the SEC was arbitrarily treating spot-traded products differently from futures-traded products.

Grayscale is owned by the crypto conglomerate Digital Currency Group (DCG), which is currently undergoing financial difficulties.

DCG also owns the bankrupt Genesis Trading, which was charged by the SEC on Jan. 12 for allegedly selling unregistered securities.

Over the weekend, John Reed Stark, a crypto skeptic and former SEC chief, lambasted the term “regulation by enforcement,” labeling it a “Bogus Big Crypto Catch Phrase.”

In a Jan. 22 post on Linkedin, he said the term was a “misguided, deflective effort designed to tap into sympathetic libertarian and anti-regulatory mores,” and called it “utter nonsense.”

He argued that “litigation and SEC enforcement are actually how securities regulation works.”

CoinDesk could be up for grabs as parent company DCG scrambles for funds

DCG has reportedly received offers for CoinDesk exceeding $200 million in recent weeks, which at a purchase price of $500,000 would be a 39,900% return on its initial investment.

Crypto media outlet CoinDesk is reportedly considering a potential sale as its parent company Digital Currency Group (DCG) looks to strengthen its balance sheet.

According to The Wall Street Journal, CoinDesk has sought the help of investment bankers from the financial advisory firm Lazard, who are helping the firm weigh options including a full or partial sale.

You know, I just realized that Coindesk is for sale. pic.twitter.com/QqmBPOClpu

— Charles Hoskinson (@IOHK_Charles) January 19, 2023

DCG has purportedly received multiple offers exceeding $200 million for the media firm over the last few months, which would result in a phenomenal return on investment given that DCG supposedly acquired the company for just $500,000 in 2016.

Barry Silbert’s DCG appears to be in serious financial strife recently, and announced to shareholders on Jan. 17 that it would be halting dividends in an effort to strengthen its balance sheet and “preserve liquidity.”

On Jan. 18, Bloomberg reported that another DCG subsidiary, crypto lending firm Genesis Global, was planning to file for bankruptcy after revealing it owed creditors over $3 billion — likely a leading factor contributing to DCG’s financial woes.

CoinDesk and Genesis are among some 200 crypto-related businesses in DCG’s venture capital portfolio, according to its website. Other companies that DCG owns include asset management firm Grayscale Investments, crypto exchange Luno and advisory firm Foundry.

Some believe that CoinDesk’s article in November exposing the irregularities in Alameda Research’s balance sheet was the first domino that eventually led to the fall of crypto exchange FTX and the liquidity issues now being faced by Genesis and its parent company DCG and the wider crypto market.

Cointelegraph has reached out to CoinDesk for confirmation that a potential sale was being considered, but was yet to receive an answer at the time of publishing.

Digital Currency Group halts dividends in an effort to preserve liquidity

Digital Currency Group, a venture capital firm that owns a stake in more than 200 crypto projects, announced the dividend halt while one of its subsidiaries is in financial strife.

Venture capital firm Digital Currency Group (DCG) has told shareholders it is halting its quarterly dividend payments until further notice as it attempts to preserve liquidity.

According to the letter sent to shareholders on Jan. 17, the firm is focused on “strengthening our balance sheet by reducing operating expenses and preserving liquidity.” DCG said it was also considering selling some of the assets within its portfolio.

Its financial issues are derived from the woes of a subsidiary, crypto broker Genesis Global Trading, which reportedly owes creditors more than $3 billion.

Customers are currently unable to withdraw funds from Genesis after it halted withdrawals on Nov. 16, which has prompted Cameron Winklevoss — on behalf of his exchange Gemini and its users with funds on Genesis — to call for the board of DCG to remove Barry Silbert as CEO of the firm in a Jan. 10 open letter.

Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2

— Cameron Winklevoss (@cameron) January 10, 2023

According to Winklevoss, Genesis owes Gemini $900 million for funds that were lent to Genesis as part of Gemini’s Earn program, which offers customers the ability to earn an annual yield of up to 7.4%. Winklevoss also claimed DCG owed $1.675 billion to Genesis, although Silbert denied this.

Soon after Winklevoss’s letter, the United States Securities and Exchange Commission (SEC) poured fuel on the fire, charging both firms on Jan. 12 with offering unregistered securities through the Earn program.

Genesis’ problems first became apparent after the Nov. 16 withdrawal halt, which it blamed on “unprecedented market turmoil” following the collapse of FTX, causing “abnormal” levels of withdrawals.

On Nov. 10, less than a week earlier, Genesis revealed it had around $175 million stuck on FTX, which resulted in DCG sending Genesis an emergency equity infusion of $140 million in an attempt to resolve its liquidity issues.

DCG also owns Grayscale Investments and its series of digital asset trusts and has invested in over 200 companies within the crypto industry, including recognizable names such as blockchain analysis firm Chainalysis, stablecoin issuer Circle and digital asset exchange Kraken.

Cointelegraph contacted DCG for comment but did not receive a response.

Breaking: DCG owes creditors over $3B, considering $500M VC portfolio sale

Crypto broker Genesis allegedly owes $900 million to clients of cryptocurrency exchange Gemini.

Cryptocurrency broker Genesis Global Trading allegedly owes its creditors more than $3 billion, according to a Jan. 12 report from the Financial Times. Its parent, the Digital Currency Group (DCG), which also owns Grayscale Investments and its series of digital asset trusts, seeks to sell part of its venture capital holdings to offset the shortfall.

According to people familiar with the matter, DCG’s venture arm has more than 200 crypto-related projects “such as exchanges, banks and custodians in at least 35 countries,” with a total valuation of around $500 million. Genesis reportedly hired investment bank Moelis to explore strategic alternatives, although people familiar with the matter said there was little capital infusion interest. On Jan 5., Genesis laid off 30% of its staff as a cost-cutting measure, a second of its kind in six months’ time.

On Jan. 12, DCG chief Barry Silbert wrote to shareholders that “bad actors and the implosion of leading crypto companies had wreaked havoc on the industry.” Silbert also disclosed that Three Arrows Capital still owes Genesis $447.5 million and 4,550 Bitcoin (BTC) worth $78 million, which matures in May 2023. Three Arrows Capital is currently in bankruptcy proceedings and creditors have expressed severe frustration towards the process.

Cointelegraph reported on November 16, 2022, that Genesis halted withdrawals citing “unprecedented market turmoil.” At the time, the company reportedly had $175 million worth of funds stuck on FTX and had already received a $140 million equity infusion to cover losses.

Previously, it was thought that Genesis Global had an estimated shortfall of $1 billion. According to Cameron Winklevoss, co-founder of cryptocurrency exchange Gemini, Genesis lent more than $2.3 billion to now-defunct hedge fund Three Arrows Capital, leaving it with a $1.2 billion loss when the firm failed in June 2022. Gemini said it lent over $900 million worth of customer deposits to Genesis as part of its Earn program. More than 340,000 users are affected in the wake of the Gemini Earn <> Genesis Global dispute.

Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2

— Cameron Winklevoss (@cameron) January 10, 2023

This is a developing story, and further information will be added as it becomes available.

A key change in Ethereum options pricing hints that ETH price could rise beyond $1,350

Ethereum whales and market makers are no longer charging excessive premiums for protective put options, a sign that ETH price could be en route to new highs.

The price of Ethereum’s native cryptocurrency, Ether (ETH), gained 10.2% from Jan. 4 to Jan. 10, breaching the $1,300 resistance without much effort. But has the Ether price move cast a light on whether the altcoin is ready to begin a new uptrend?

Will Ether’s former resistance level turn to support?

After testing the $1,200 support on Jan. 1, the eight-week ascending channel has displayed strength, but Ether bulls fear that negative newsflow might break the pattern to the downside.

*EETH/USD price index, 12-hour. Source: TradingView*

Despite the positive price trend, the sentiment around Ether and other cryptocurrencies hasn’t been very enticing. For example, Xiao Yi, the former Chinese Communist Party secretary of Fuzhou, confessed on Jan. 8 to “acting recklessly” in support of crypto mining. Xiao spoke from what appeared to be a prison, apologizing for causing “grave losses” to the Fuzhou region.

On Jan. 10, South Korean tax agents reportedly raided crypto exchange Bithumb’s offices to explore a potential tax evasion case. On Dec. 30, Park Mo — an executive at Bithumb’s parent company — was found dead, though he was under investigation for embezzlement and stock price manipulation.

Also on Jan. 10, Cameron Winklevoss, co-founder of the Gemini exchange, issued an open letter to Barry Silbert, CEO of Digital Currency Group. In the letter, Winklevoss makes some serious fraud accusations and requests that the Grayscale fund management holding company dismiss Silbert to provide a resolution for Gemini’s Earn users.

The ongoing crypto winter left another scar on Jan. 10 as the leading U.S. cryptocurrency exchange, Coinbase, announced a second round of layoffs, impacting 20% of the workforce.

However, the exchange’s CEO, Brian Armstrong, tried to minimize the damage by stating that Coinbase remains “well capitalized” and tranquilize investors with business-as-usual messages.

Consequently, some investors believe Ether could revisit prices below $600 as fear remains the prevalent sentiment. For instance, trader Crypto Tony expects the current triangle formation to cause another “leg down later this year.”

$ETH / $USD – Update

Unless we take out $2,200 on the macro level I am treating this as consolidation for a B or X wave, before we get one more leg down later this year

Volume is contracting and I also expect this to dwindle down lower. Pay attention pic.twitter.com/LTik7GXEYa

— Crypto Tony (@CryptoTony__) January 10, 2023

Let’s look at Ether derivatives data to understand if the bearish newsflow has caused traders to avoid leverage longs and neutral-to-bullish option strategies.

Leveraged bulls lagged the recent rally

The two-month futures annualized premium should trade between +4% and +8% in healthy markets to cover costs and associated risks. When the futures trade at a discount versus regular spot markets, it shows a lack of confidence from leverage buyers, which is a bearish indicator.

The chart above shows that derivatives traders using futures contracts exited the negative premium on Jan. 1, meaning the extreme bearish sentiment is gone. However, the current 1.5% premium remains below the 4% threshold for a neutral market. Still, the absence of leverage buyers’ demand does not mean traders expect a sudden market downturn.

For this reason, traders should analyze Ether’s options markets to understand whether investors are effectively pricing in odds of a $600 retest.

Options traders have stopped overcharging for downside protection

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.

The delta skew currently sits at 11% after flirting with the neutral range on Jan. 9, meaning that whales and market makers no longer charge excessive premiums for protective put options. That is a stark contrast from late 2022 when those trades were running up to 19% more costly than equivalent bullish strategies using options.

Overall, both options and futures markets point to pro traders becoming more confident and increasing the odds of $1,300 becoming a support level. So, even if the newsflow doesn’t seem appealing, traders are unwilling to add bearish bets, which might fuel further positive momentum for Ether.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.