The price of ether is struggling around $3,000, but data suggests that the bull trend may be resumed.
Ether is battling the $3,000 resistance level right now, after a stunning 29.7% increase from February 6 to February 20.
Analysts credit the recent advances in ETH to a reduction in supply, which is being pushed by the network’s proof-of-stake burn mechanism and the increasing demand for staking and decentralised finance (DeFi) apps.
Although Ether’s surge to $3,000 is noteworthy, the more important question is whether the altcoin will muster enough momentum to recapture the desired $3,300 mark, which was last attained in March 2022.
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“Ethereum hasn’t even hit its demand season yet.” – Ryan Sean Adams
Adams surmises that the possible launch of an exchange-traded fund (ETF) for spot ether might increase its value, particularly in the lack of “new supply.”
According to ultrasound.money, the supply data plainly demonstrates a drop of 18,960 ETH in the total amount of coins in circulation for the last 30 days.
It’s important to remember that this indicator may not accurately represent the amount of ETH that is available for purchase, which may be determined by looking at exchanges’ net deposits.
According to the seven-day trend, net withdrawals have been preferred since February 15; but, as was evident in early January, this might readily alter.
In contrast to forecasts, Ether’s price was stable at $2,300 for the 30 days preceding January 5, indicating that the cause of the sell wasn’t coincident with a price increase.
Essentially, it appears that the dynamics of ETH staking and demand in decentralised applications have no direct effect on the amount of ETH that is available for purchase.
The possible acceptance of the ETF may theoretically cause Ether’s price to climb; analysts estimate that the chances of approval range from 50% to 80%, so a good surprise is possible.
But if Bitcoin’s upward momentum wanes, it becomes less likely that Ether will consolidate above $3,300, indicating that institutional investor inflows may not be sufficient to propel its price.
Furthermore, the historical relationship between the values of ETH and BTC is still significant.
There's no guarantee that the historical trend will persist, particularly with the potential bullish momentum from the spot Ether ETF, but sustained decoupling between Bitcoin's and Ether's price has been a rarity in the past nine months.
Instead of fixating on the anticipated ETF decision in May, traders should examine other catalysts, such as the demand for ETH stemming from airdrop snapshots and the overall Ethereum network demand.
Even with the possible bullish impetus from the spot Ether ETF, there’s no assurance that the historical trend will hold, but during the last nine months, persistent decoupling between the prices of Ether and Bitcoin has been rare.
Traders should look at other catalysts, such the demand for ETH resulting from airdrop snapshots and the broader Ethereum network demand, rather than obsessing over the expected ETF decision in May.
For example, interest in the future Ethereum token releases waned after the much-anticipated layer-2 token, Starknet (STRK), had a nearly 60% decline since February 20.
Significant sell pressure from airdrop hunters and significant Ethereum infrastructure companies like Nethermind was blamed for this decline.
In addition, grievances concerning individuals judged ineligible for the distribution and disputes involving the disclosure of 13% of the inventory just two months following the debut arose.
The price of ETH futures monthly contracts should be compared to ordinary spot markets in order to determine whether professional traders are still positive about Ether’s price despite the $3,000 support.
Because of their longer settlement term, these instruments usually trade at a premium of 5% to 10% in neutral markets.
Note that the Ether one-month futures premium has remained over 14% since February 17, suggesting that there is still a significant demand for leverage longs (buys).
Additionally, while the metric shows bullishness, it lacks the extreme optimism of the 25% premium from January 2.
The data indicates that exchange supply and leverage utilisation in futures markets shouldn’t worry Ether bulls, keeping the likelihood of ETH going beyond $3,300 reasonable.
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