From April 13 to April 14, Ether (ETH) saw a substantial decline of approximately 15%, dropping below the $3,300 mark. Whenever the price approached $3,000, buyers stepped in, bolstering the support. Yet, some traders are worried that ETH may struggle to regain its footing at $3,500 without a more compelling reason.
According to analyst DeFiSurfer808, the reason Ether’s price is not keeping pace with Bitcoin (BTC) may be due to the absence of recent significant developments or exciting news within the Ethereum network. In simpler terms, there isn’t a new compelling story or trend driving the price of Ethereum upwards at the moment.
Ethereum deals with constant regulatory uncertainty
For the past two months, Bitcoin outpaced Ether’s performance by 16%. This difference grew more pronounced on April 9 when Jan van Eck, VanEck’s chief investment officer, suggested that applications for a U.S. spot Ether exchange-traded fund (ETF) might not be approved in May. The SEC, the American regulatory body, has yet to make a decision on seven pending applications for such Ether ETFS, as previously reported by CryptoMoon.
Despite Ether being categorized as a non-security asset, ongoing debates between regulators and exchanges over their roles in the Ethereum market can discourage investors from embracing the wider Ethereum ecosystem, including layer-2 solutions, decentralized finance (DeFi), and non-fungible token (NFT) marketplaces.
On April 11, Uniswap Labs expressed their readiness to defend themselves after receiving a warning letter, known as a Wells notice, from the U.S. Securities and Exchange Commission (SEC). The specifics of the notice were not shared by Uniswap Labs, but they strongly stated in a blog post that UNI tokens are not considered securities under their interpretation. Moreover, they clarified that their platform does not fall under the categories of a securities exchange or broker as defined by U.S. law.
Currently, the regulatory environment is undergoing changes. Two key attorneys from the Securities and Exchange Commission (SEC), Michael Welsh and Joseph Watkins, involved in the lawsuit against crypto platform DEBT Box, stepped down on April 22 following a Bloomberg report exposing alleged misuse of authority in the case. Previously, in March, Federal Judge Robert J. Shelby imposed penalties on the SEC for providing false information and misrepresentations during the lawsuit.
The Blockchain Association and Crypto Freedom Alliance of Texas have filed a lawsuit against the SEC in the Northern District of Texas. They argue that the SEC’s expansive definition of “dealer” under the Securities Exchange Act of 1934 is unclear and places undue burden on digital asset businesses.
Ether’s on-chain and derivatives data tell a different story
On the 23rd of April, the price of Ether surpassed $3,200 due to heightened interest in Ethereum’s decentralized apps (DApps). Based on DefiLlama data, Ethereum’s smart contract deposits, signified by the amount of value locked (TVL), attained their peak since last July at 30.2 million ETH on the 22nd of April, representing a noteworthy 8% growth compared to the preceding month.
The value locked in Ethereum’s decentralized finance (DeFi) ecosystem has seen significant growth recently, with notable projects like EigenLayer’s staking solution, Uniswap exchange, Pendle automated yield provider, and Renzo liquid staking application contributing to this increase. In comparison, Tron’s TVL declined by 5% in TRX terms during the past month, with its leading DeFi platform, JustLend, experiencing a drop of 11% in deposits.
To determine if professional traders have become bearish towards Ether following its poor price performance, you can look at the Ethereum options 25% delta skew as an indicator. A higher than average delta skew value of around 7% suggests traders are expecting a price decrease. Conversely, a negative delta skew value below -7% usually indicates bullish sentiment among traders.
Between the 9th and 18th of April, the Ether options skew metric indicated that traders grew less wary of risk, as shown by an upward trend. Yet, this pattern shifted on the 19th, with ETH trading below $3,000 and the trend reverting. Presently, data suggest a balanced relationship between buy (call) and sell (put) options, signaling a market sentiment that remains neutral.
Despite Ether’s price failing to hold above $3,000 recently, key metrics related to Ethereum and its derivatives on the blockchain remain robust. It’s early to assume a bull market reaching $3,500 or beyond, as the interest among investors in an approved U.S. spot Ethereum ETF remains low.
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2024-04-23 21:12