Ether’s Recovery Signals a Potential Turning Point
The price of Ether (ETH) recently faced significant challenges, dropping to the $1,530 support level on September 11. However, the altcoin has since made an impressive recovery, surging by 6%. This recovery could be a crucial moment for ETH after experiencing a 16% loss over the past month.
ETH Derivatives and Network Activity Hold Key
Investors are now questioning whether Ether has the potential to climb back to $1,850. To answer this, it is important to consider ETH derivatives and network activity. In the last 30 days, the top Ethereum decentralized applications (DApps) have seen a decrease of around 26% in active addresses. However, the Lido liquid staking project stands out with a 7% increase in total value locked (TVL) in ETH terms. Nonetheless, Lido’s dominance has drawn criticism due to its control over 72% of all staked ETH.
Concerns over Centralization
Vitalik Buterin, Ethereum’s co-founder, recognizes the need for greater accessibility for everyday individuals to run nodes in order to maintain decentralization. However, Buterin does not foresee a solution to this challenge within the next decade. As a result, investors have legitimate concerns about centralization and the influence of services like Lido.
ETH Futures and Options Reflect Reduced Interest from Leveraged Longs
Examining derivatives metrics provides insights into how professional traders position themselves in the current market conditions. Ether monthly futures typically trade at a 5% to 10% annualized premium known as contango. However, Ether futures’ premium hit its lowest point in three weeks at 2.2%, indicating a lack of demand for leveraged long positions.
Options markets offer a better gauge of market sentiment, with the 25% delta skew indicating whether professional traders lean bearish. A rise above 7% suggests an expected drop in Ether’s price, while a -7% skew indicates periods of excitement. On September 14, the Ether 25% delta skew briefly turned bullish, driven by put options trading at an 8% discount compared to call options. However, this sentiment waned on September 15, with both call and put options trading at a similar premium. This suggests reduced interest in leveraged long positions among Ether derivatives traders despite defending the $1,530 price level.
The Challenges Ahead for Ether
Ether faces potential catalysts such as requests for a spot ETH exchange-traded fund and macroeconomic factors driven by inflationary pressure. However, there are also challenges including declining DApp usage and ongoing regulatory uncertainties that contribute to fear, uncertainty, and doubt (FUD). These factors are likely to continue exerting downward pressure on Ether’s price, making a rally to $1,850 in the short to medium term unlikely.
Hot Take: Ether’s Recovery Raises Questions About its Future
Ether’s recent recovery after facing significant challenges has sparked discussions about its potential trajectory. While the altcoin has made an impressive rebound, questions remain about whether it can reach $1,850 again. Factors such as ETH derivatives and network activity play key roles in determining its future performance. Additionally, concerns over centralization and the dominance of projects like Lido have raised valid investor concerns. Despite potential catalysts like requests for an ETH exchange-traded fund and macroeconomic factors, ongoing regulatory uncertainties and declining DApp usage may continue to hinder Ether’s price growth. As a result, a short to medium-term rally to $1,850 seems unlikely.
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