Ether (ETH) rallied 35% over the by ten days and reclaimed the critical $two,300 back up, but the crucial $2,450 local top hasn't been tested since June 17. Role of the recent recovery tin be attributed to the London difficult fork, which is expected to go live on Aug. 4.

Traders and investors view the EIP-1559 launch equally a bullish gene for Ether's price because information technology is expected to reduce gas fees. However, Ethereum miners are non thrilled with the proposal because the proof-of-work model volition no longer exist necessary after Ethereum 2.0 goes live.

The network fees volition be set automatically, although users can choose to pay extra for faster confirmation. Miners (or validators, in the future) will receive this additional fee, but the base fee volition be burned. In a nutshell, Ether is expected to become deflationary.

Ether price in USD on Bitstamp. Source: TradingView

While it's difficult to identify the main drivers of the contempo rally, information technology is possible to gauge professional traders' sentiment past analyzing derivatives metrics.

If the recent price motion was enough to instill confidence, the futures contracts premium and options skew should reverberate this change clearly.

Bullish sentiment is missing even later on futures contracts entered contango

By analyzing the toll divergence between futures contracts and regular spot markets, one can better understand the prevalent sentiment amidst professional traders.

The three-month futures should trade with a 6% to 14% annualized premium on neutral to bullish markets, which is in line with stablecoins' lending rate. Past postponing settlement, sellers need a college price and this causes the premium.

Whenever the futures premium fades or turns negative, it raises an alarming red flag. This situation is likewise known as backwardation and indicates that in that location is bearish sentiment.

September Ether futures premium at OKEx. Source: TradingView

The above nautical chart shows that the Ether futures premium flipped negative on July 20 as Ether tested the $1,750 support. However, even the massive rally up to $ii,450 wasn't enough to bring the September contract premium in a higher place 1.3%, equivalent to 8% annualized.

Had there been some excitement, the annualized futures premium would take been at 12% or college. Therefore, the stance of professional traders seems neutral correct now and is flirting with bearishness.

To exclude externalities exclusive to the futures musical instrument, traders should besides analyze options markets.

Options markets ostend that pro traders are not bullish

Whenever market makers and whales lean bullish, they will demand a college premium on call (buy) options. This move will cause the 25% delta skew indicator to shift negatively.

On the other hand, whenever the downside protection (put choice) is more than costly, the 25% delta skew indicator will become positive.

Ether 1-month options 25% delta skew. Source: Laevitas

Readings between -10% and +10% are unremarkably deemed neutral. The indicator had been signaling "fear" between May twenty and July 19 simply chop-chop improved later the $1,750 support held.

Despite this, the current 25% delta skew at -4 isn't plenty to configure a "greed" indicator. Options markets pricing is currently well balanced between call (buy) and put (sell) options.

Both derivatives metrics suggest that professional traders gradually exited the "fearfulness mode" on July 20, but they are nowhere near bullish.

Currently, there is piffling confidence in the recent rally from these metrics' perspective, which is understandable considering the risks presented by the upcoming hard fork and the uncertainty caused by unsatisfied miners.

The views and opinions expressed here are solely those of the writer and do not necessarily reflect the views of Cointelegraph. Every investment and trading motility involves take chances. You should acquit your own research when making a decision.