Key takeaways:
The stability of Ether’s futures premium and derivatives showcases resilience despite the recent drop in price.
Onchain indicators emphasize Ethereum’s leading role in fees and total value locked (TVL), bolstering its long-term recovery prospects.
Ether (ETH) has seemingly stabilized around $4,070 on Wednesday after experiencing a sharp six-day drop of 15.1%. This decline wiped out $817 million in bullish leveraged positions yet did not initiate a widespread bearish sentiment. Conversely, ETH derivatives indicate that traders remain optimistic about potential recovery, with $4,700 still in sight.
ETH 6-month futures annualized premium. Source: laevitas.ch
The annualized futures premium for ETH has remained above the neutral 5% mark throughout the downturn, signaling overall confidence. Monthly futures generally command higher prices compared to spot markets due to longer settlement times; however, the last significant bullish indicator from this metric appeared in January. Even the substantial 100% ETH rally from July 1 to August 13 could not fully revive trader sentiment.
Economic uncertainty dampens investor sentiment
This reluctance can be attributed to prevailing macroeconomic uncertainties. US inflation remains above the Federal Reserve’s 2% target, with economic growth displaying mixed signals. The Nasdaq Composite saw declines for the second consecutive session on Wednesday, driven by worries that artificial intelligence stocks might be overvalued.
CNBC reported that traders have adjusted their positions ahead of remarks from US Federal Reserve Chair Jerome Powell on Friday. “If Powell’s comments are more hawkish, it could put more pressure on tech stocks,” remarked Carol Schleif, chief market strategist at BMO Private Wealth. Additionally, Target’s disappointing earnings highlighted ongoing profitability challenges.
ETH 30-day options delta skew (put-call) at Deribit. Source: laevitas.ch
In a surprising turn, ETH options show a neutral stance, balancing demand for both downside and upside protections. The current 4% reading reflects an even distribution between put (sell) and call (buy) interests. Nevertheless, the lack of robust confidence following ETH’s brief surge above $4,700 is somewhat concerning, indicating hesitance around predicting a new all-time high.
Ethereum onchain activity indicates heightened demand for ETH
Onchain activities offer a more optimistic outlook. Ethereum is solidifying its lead over competitors, capturing approximately 60% of the overall market’s total value locked (TVL), according to DefiLlama. Notably, network fees are on the rise, indicating heightened demand for blockspace, which aids Ether’s price recovery.
Top blockchains ranked by 7-day fees, USD. Source: Nansen
Ethereum’s 7-day fees reached $11.2 million on Wednesday, marking a 38% rise from the previous week. In contrast, Solana’s fees increased by only 3%, while BNB Chain revenues dipped by 3%. This contrast underscores Ethereum’s superiority in decentralized exchange volumes, which totalled $129.7 billion over the last 30 days, as per DefiLlama.
Related: Bitcoin, Ether ETFs experience nearly $1B outflows as prices decline
Although Ether derivatives indicate caution, this perspective aligns more closely with the broader crypto market correction than with Ethereum’s underlying fundamentals. Traders seem apprehensive that US import tariffs might negatively impact global growth, prompting a flight to safety in investments.
Ultimately, Ether’s path to reclaiming $4,700 depends on reduced investor anxiety regarding the economy. However, derivatives data reveal that professional traders maintain their composure, showing no signs of panic even after the retest of $4,100, supporting the notion that Ether’s recovery is more firmly grounded than initially thought.
This article is for general information purposes and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
