Look out below! Ethereum derivatives data hints at further downside from ETH

cointelegraph.com:

Ether (ETH) is down 38% in three weeks and the current $2,000 level is 59% below the $4,870 all-time high that was reached in November 2021. Additional newsflow that added to the current market wide volatility were the bankruptcy fears that emerged after Coinbase, the largest U.S. exchange reported a $430 million first-quarter 2022 loss. 

In the most recent 10-Q filing Coinbase included the following disclosure:

Regulatory uncertainty was also partially responsible for Ether’s sharp correction. On May 11, Kukmin, a South Korea-based newspaper, reported a leaked draft of the upcoming governmental "Digital Asset Basic Act (DABA)" bill. The administration of South Korea expects to introduce a regulatory framework for initial coin offerings (ICOs), along with a 20% tax on crypto gains above $2,100 per year.

Another factor impacting markets is investors' confidence in stablecoins. On May 11, USD Tether (USDT), the largest stablecoin by market capitalization, broke below its peg, and traded under $0.99 on major exchanges. However, Tether and Bitfinex chief technology officer Paulo Ardoino highlighted that USDT has maintained its stability through multiple black swan events and "continues to process redemptions normally."

To understand how larger-sized traders are positioned, one should look at Ether's futures and options market data. The 25% delta skew is a telling sign whenever arbitrage desks and market makers overcharge for upside or downside protection.

If those traders fear an Ether price crash, the skew indicator will move above 10%. On the other hand, generalized excitement reflects a negative 10% skew. That is precisely why the metric is known as the pro traders' fear and greed metric.

The skew indicator has been above 10%