On April 7, the price of Ether (ETH) reached a low of $1,410, marking its lowest point since March of the same year. This significant drop triggered liquidations of leveraged ETH futures amounting to over $370 million within a mere two days, as reported by CoinGlass. However, the cryptocurrency made a recovery, climbing back above the $1,500 mark, coinciding with the S&P 500 index’s return to the psychological threshold of 5,000.
Ether/USD (blue) vs. total crypto market capitalization (magenta). Source: TradingView / Cointelegraph
In the past month, Ether has underperformed compared to the broader cryptocurrency market by 14%. Surprisingly, professional traders are not showing signs of pessimism. This sentiment is reflected in Ethereum’s derivatives data and on-chain metrics. While these indicators do not confirm that ETH’s price has reached its bottom, the waning demand for bearish positions below $1,600 provides a glimmer of hope for bullish investors.
Ether 2-month futures annualized premium. Source: laevitas.ch
On the same day, the Ether monthly futures premium had improved to 4%, following a dip to 3% earlier in the day. Although not yet back to neutral levels, this is an increase from the low of 2% observed on March 31. Currently, there is a noticeable lack of demand for long positions (buying), a usual trend after a dramatic 30% decline in ETH’s price within the past month.
Global Economic Concerns Impacting Ethereum
Investors remain wary as escalating global trade tensions raise the specter of a potential economic recession, which could dampen interest in risk assets, including cryptocurrencies. This scenario limits the optimistic prospects tied to a anticipated interest rate cut during the U.S. Federal Reserve’s next meeting scheduled for May 6-7. Traditionally, such cuts have been beneficial for cryptocurrencies as they typically reduce returns on fixed-income investments.
Notably, despite U.S. President Donald Trump’s calls for interest rate reductions, Federal Reserve Chair Jerome Powell has maintained a cautious stance regarding inflation trends. On April 4, he stated, “It is too soon to say what will be the appropriate path for monetary policy,” as reported by Yahoo Finance.
Further pressure on Ether’s value came from the decision to delay the Pectra upgrade, originally slated for April. The developers have now targeted May 7 for the mainnet launch, although a specific reason for this delay has not been disclosed. This follows the successful implementation of the Hoodi testnet upgrade on March 26.
Moving Forward: Moderate Resilience in Ether Derivatives
Given the current wave of negative news, one might expect Ether bears to dominate the market. However, derivatives data indicates that this is not the case. Typically, when traders anticipate a downturn, put (sell) options trade at a premium, resulting in the 25% delta skew metric exceeding 6%. Conversely, in bullish periods, this indicator typically falls below -6%.
Ether 30-day options skew (put-call) at Deribit. Source: Laevitas.ch
Currently, the ETH options skew is at 10%, mirroring the level from March 31, yet still indicative of bearish sentiment. Notably, this is significantly less extreme compared to May 2024, when the skew peaked at 20% amidst a drastic decline in ETH’s value from $3,700 to $2,860 within a five-week period. This suggests that while bearish sentiment exists within the Ether derivatives markets, it is not alarmingly severe.
On-chain data illustrates resilience within the Ethereum network. As of April 6, the Total Value Locked (TVL) reached an all-time high of 30.2 million ETH, marking a 22% increase compared to the prior month, surpassing Solana’s 12% increase and BNB Chain’s 16% climb in TVL during the same timeframe.
In conclusion, while macroeconomic factors continue to steer cryptocurrency demand, the analysis of Ether’s derivatives data and TVL performance indicates that the downside for ETH’s price may be limited.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
