Ether (ETH) fell to $1,410 on April 7th, reaching its lowest level since March 2023. This sharp decline has led to the liquidation of leveraged dock futures in two days, according to Coinglas data. However, Altcoin was able to recover above $1,500 as the S&P 500 index recovered psychological 5,000 support levels.
Ether/USD (blue) vs. Total crypto market capitalization (magenta). Source: TradingView / Cointelegraph
For the past 30 days, ether has been 14% below the broader cryptocurrency market. Nevertheless, professional traders are still not ready to be bearish, as suggested by Ethereum’s derivatives data and on-chine metrics. While this data does not guarantee that ether prices have reached a bottom, the decline in demand for bearish positions under $1,600 provides some security for bullish investors.
Ether 2-month futures annual insurance premium. Source: laevitas.ch
On April 7, Ether Monthly Futures Premium rose to 4% after soaking in 3% early in the day. It is still below the 5% neutral threshold, indicating an improvement from March 31st, when the indicator reached a 2% low. Currently, there is a significant shortage of demand from long positions (buyers), but this is not uncommon as ETH prices have dropped sharply over the past month.
Ether is the victim of macroeconomic degradation
Investors are concerned that increasing global trade tensions could lead to economic recession and reduce interest in risk-on assets. This scenario also weakens the potential positive impact of the potential for interest rate reductions during the next meeting of the US Federal Reserve (FED) on May 6-7. Typically, such a move will benefit the cryptocurrency market by reducing the returns on fixed income investments.
As stated in the Truth Social Post on April 7, Fed Jerome Powell has been cautious about inflation trends despite President Donald Trump’s strong push for interest rate cuts. According to Yahoo Finance, Powell said on April 4th that “it’s too early to say something that would be the right path for monetary policy.”
Adding even more pressure to the price of ether was the Ethereum developer’s decision to delay the Pectra upgrade, originally scheduled for April. The developers currently set May 7th as the target date for launching the mainnet, but no specific reason for the delay is provided. This is despite the successful implementation of the Hoodi TestNet upgrade on March 26th.
Ether derivatives show moderate resilience, and Ethereum TVL jumps to the highest ever
Given the negative news flow, they may have expected Ether Bear to take full control of the market. However, derivative data suggests that bears are less confident than expected. If traders predict corrections, Put (selling) options tend to trade at premium, pushing 25% Delta Skew metrics above 6%. Conversely, during bullish periods, this indicator is usually below -6%.
Delibit 30-day optional skew (put call). Source: laevitas.ch
Currently, ETH options are at 10%, the same level as March 31, remaining within bearish territory. However, this reading is extremely low compared to May 2024, when it peaked at 20% amid a sharp decline in ETH prices from $3,700 to $2,860 within five weeks. Essentially, the ether derivative market signals bearish emotions, but does not reflect the level of panic.
Ethereum’s on-chain data shows resilience despite wider market challenges. The total value (TVL) locked on the Ethereum Network reached an all-time high of 30.2 million ETH on April 6th. This was an increase of 22% compared to the previous month. This growth has resulted in an increase in Solana’s SOL (SOL) term by 12%, and 16% TVL in the BNB chain has risen over the same period.
Ultimately, macroeconomic conditions continue to be a major factor in cryptocurrency demand. However, analyzing ether derivative data and Ethereum’s TVL performance seems likely to limit the lower side of ETH prices.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
