Data on Ethereum prices raises questions about how strong ETH’s $3K support is

Written by Rock Buivy

Post Date: 17 Apr, 24

Pro traders’ willingness to take on risk is decreasing, according to ETH derivatives data, which puts pressure on the $3,000 support level.

Between April 9 and April 14, the price of ether fell by 21%, reaching a 50-day low.

Despite having recovered some of its losses, Ether is still exhibiting indications of weakness after its April 14 effort to break through the $3,200 resistance level was unsuccessful.

Traders are now wondering how long the $3,000 support level will last.

Experts are pessimistic about the likelihood of the spot Ether ETF being approved

Regarding the possible approval of a spot Ether exchange-traded fund (ETF) in May, investors are cautiously optimistic.

Before the U.S. Securities and Exchange Commission (SEC) issues its ruling, there may be more revisions, based on the contradictory signals from on-chain and derivatives data.

The CEO of the VanEck investment firm, Jan van Eck, expressed scepticism on the acceptance of the spot Ether ETFs in May.

Using a list of seven pending applications, which included those from well-known companies including BlackRock, Fidelity, ARK 21Shares, and VanEck, he pointed to the SEC’s prolonged inactivity.

The absence of “critical feedback” from the regulator, even in in-person discussions, indicates poor approval odds, potentially as low as 35%, according to Eric Balchunas, Senior Bloomberg ETF analyst.

“There’s no reason for the SEC to have done absolutely nothing for months when we knew this was coming,” said James Seyffart, another analyst covering ETFs for Bloomberg.

To blame Ether’s recent decline entirely on the unlikely approval of a spot Ether ETF would be oversimplified, especially in light of the fact that the largest cryptocurrency, Bitcoin, also saw a 14% decline in the five days preceding April 13.

A more thorough examination would contrast Ether’s results with those of its direct rivals, especially those engaged in the development of decentralised apps (DApps).

The 15% reduction in Ether since April 9 has been more noticeable than the 8% decline in BNB and the 10% decline in Tron.

On the other hand, Solana fell much more steeply. These numbers, however, might not accurately represent the amount of activity occurring within each network’s DApps.

It is imperative to investigate the patterns of total value locked (TVL) in these networks.

DefiLlama reports that on April 15, Ethereum’s network TVL reached 16.4 million ETH, a 14.8% month-over-month rise, and its highest level in over 13 months.

In contrast, Tron’s deposits decreased by 1% in the 30 days prior to April 15 while the BNB Chain’s TVL was steady at 9.5 million BNB.

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The price outlook for Ethereum derivatives and DApp activity is mixed

While the preliminary research indicates that the Ethereum network has an advantage over its rivals, a more thorough investigation is required because not all decentralised applications (DApps) need large deposit bases.

It’s critical to evaluate network activity by looking at transaction volumes and the number of active users.

DappRadar reports that the Ethereum blockchain held onto its lead with a 7-day DApp volume of $45.7 billion, far surpassing the primary competitor, the BNB Chain.

Furthermore, Ethereum’s dip was milder than that of the BNB Chain, which had a 7% decline in active addresses (UAW), a proxy for user involvement with DApps, which has declined by 3% since April 9.

It’s critical to examine ETH options in order to determine whether or not experienced traders are now less optimistic about Ether’s future.

In general, predictions of a price decline are indicated by a delta skew indicator above 7%, whereas a skew below -7% suggests a bullish outlook.

After circling the 7% threshold for four days, Ether’s options skew metric hit its highest point in more than two months on April 16 and entered negative territory.

This pattern implies that market makers and whales are asking a higher price for downside price protection on ETH.

On the one hand, Ether’s price is supported by the expectation of a ruling on the spot Ether ETF in May, and the network’s on-chain activity, albeit stagnating, has outperformed that of its rivals.

However, as demonstrated by the derivatives markets on April 16, professional traders’ increasing aversion to risk is a warning not to ignore the possibility of additional ETH price corrections below $2,900.

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