Ethereum Price Recovers Slightly but Professional Traders Remain Unconvinced

Summary

• Ethereum futures premium and options skew show professional traders are not bullish despite the recent price rise.

• Ethereum’s DApp revenue decreased, but stablecoin holdings and DeFi TVL remain strong indicators of network adoption.

• Ether ETF outflows and neutral funding rates suggest retail investors are also cautious about near-term price recovery.

Ethereum’s native token, Ether, has experienced a modest price increase of 6.4% from a recent low of $1,768 on March 30th, reaching $1,818.

Efforts to breach the $2,000 level have been unsuccessful.

Market observers suggest that a decline in meme coin popularity may be contributing to the subdued market activity, impacting decentralized applications (DApps) within the Ethereum ecosystem and the broader cryptocurrency market.

Year-to-date, Ether is down 44%. Analysis of derivatives market data indicates that traders are not exhibiting bullish sentiment and express limited confidence in rapid price recovery.

This perspective is reflected in the premium of Ether futures contracts relative to spot prices.

While this premium increased to 4% on April 2nd, up from 2% on March 31st, it remains below the 5% level typically considered neutral.

This suggests that Ether investors have not shifted to a broadly bullish outlook despite price finding support around the $1,800 level.

Further insight into professional trader sentiment can be gleaned from the Ether options market.

Typically, a neutral market environment results in a balanced 25% delta skew between call and put options, generally ranging from -6% to 6%.

Currently, the Ether delta skew is at 7%, down from 9% on March 31st. This positive reading indicates continued risk aversion among options traders.

The elevated cost of hedging strategies suggests that market makers and whales are still concerned about potential further price declines for Ether, implying a potentially extended timeframe for investor confidence to return.

Ethereum Network Adoption Persists Despite DApp Revenue Decline

Ethereum DApp revenue experienced a 49% decrease between January and March. This revenue contraction can be seen as a factor contributing to Ether’s price challenges.

Reduced network activity can limit new user acquisition and overall demand for Ether. However, core aspects of Ethereum’s utility, including its advantages in decentralized finance (DeFi) compared to traditional finance, are ongoing.

Ethereum’s stablecoin holdings are approaching a record high of $124.5 billion, and the platform continues to hold the dominant position in DeFi with $49 billion in total value locked (TVL).

This data indicates continued underlying strength in Ethereum adoption and potential for growth, particularly as new applications emerge, such as complex DeFi and structured financial products utilizing synthetic assets.

Despite challenges in sectors like metaverse applications, decreased interest in meme coins, and reduced NFT marketplace activity, the Ethereum network’s infrastructure and core utility remain in use.

Funding Rate Neutral Amid ETF Outflows

Alongside professional trader positioning, retail investor sentiment provides additional context. Perpetual futures typically track spot market prices closely.

Discrepancies are managed via the funding rate mechanism, applied every eight hours. In neutral market conditions, this rate typically ranges between 0.1% and 0.3% over seven days.

The Ethereum perpetual funding rate has remained neutral since March 31st, suggesting that retail traders are not aggressively buying into the price dip.

Contributing to this measured approach are spot Ether exchange-traded funds (ETFs), which have experienced net outflows of $37 million in the last two weeks.

While derivatives market indicators are reflective of past positioning and do not guarantee future price movement, potential shifts in sentiment remain possible.

Recent positive developments include investments in Ether by entities associated with the Trump family and public endorsements of Ether from figures like Eric Trump.

Current data suggests both professional and retail investors maintain a cautious stance regarding Ether’s near-term price prospects.

Also Read: Ethereum’s Price Trend Four Months of Declines Spark Bottoming Debate Against Bitcoin

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