On April 7, the price of Ether (ETH) fell to $1,410, hitting its lowest point since March 2023. This quick drop resulted in the liquidation of over $370 million in leveraged ETH futures within two days, according to data from CoinGlass. Nevertheless, the altcoin managed to bounce back above the $1,500 threshold as the S&P 500 index regained its psychological support level of 5,000.
Ether/USD (blue) versus total crypto market capitalization (magenta). Source: TradingView
Over the last month, Ether has lagged behind the overall cryptocurrency market by 14%. Despite this, professional traders remain cautious and have not fully embraced a bearish outlook, as indicated by Ethereum’s derivatives data and onchain metrics. While this information does not guarantee that Ether has reached its lowest price, the declining interest in bearish positions beneath the $1,600 mark offers some comfort to bullish investors.
Ether 2-month futures annualized premium. Source: laevitas.ch
On April 7, the monthly futures premium for Ether increased to 4% after a dip to 3% earlier in the day. Although this remains below the neutral threshold of 5%, it is an improvement from March 31, when it fell to a low of 2%. Presently, the lack of demand from long positions (buyers) is not unusual following a substantial 30% drop in ETH’s price over the last month.
Ether faces headwinds from deteriorating macroeconomic factors
Investor anxiety about escalating global trade tensions is prompting concerns that these dynamics could trigger an economic recession and dampen enthusiasm for riskier assets. This situation diminishes the potentially positive effects of a possible interest rate cut during the U.S. Federal Reserve’s next meeting scheduled for May 6-7. Generally, such a cut would favor the cryptocurrency market by diminishing returns on fixed-income investments.
Despite significant pressure from U.S. President Donald Trump advocating for interest rate cuts—highlighted in his April 7 post on Truth Social—Fed Chair Jerome Powell maintains a cautious stance regarding inflation trends. Powell noted on April 4, “It is too soon to say what will be the appropriate path for monetary policy,” as reported by Yahoo Finance.
Further putting pressure on Ether’s price was the decision by Ethereum developers to postpone the Pectra upgrade, which was initially slated for April. The new target date for its mainnet launch is May 7, though specific reasons for the delay were not disclosed. This comes in light of the successful implementation of the Hoodi testnet upgrade on March 26.
Ether derivatives show moderate resilience while Ethereum’s total value locked reaches an all-time high
Given the negative press, one might expect Ether bears to dominate the market completely. However, derivatives data indicates that bearish sentiment may not be as strong as anticipated. Usually, when traders predict a market correction, put (sell) options trade at a premium, leading to a 25% delta skew metric rising above 6%. In contrast, during bullish times, this indicator often falls below -6%.
Ether 30-day options skew (put-call) at Deribit. Source: Laevitas.ch
Currently, the ETH options skew sits at 10%, consistent with the level from March 31, indicating a bearish outlook. However, this is a significant decrease from May 2024, when it peaked at 20% amidst a sharp decline in ETH’s price from $3,700 to $2,860 over five weeks. Essentially, while Ether derivatives markets exhibit bearish sentiment, they do not reflect extreme levels of panic.
Onchain data for Ethereum reveals resilience against broader market struggles. The total value locked (TVL) on Ethereum reached an impressive all-time high of 30.2 million ETH on April 6, marking a 22% rise from the previous month. This growth surpasses the 12% increase seen in Solana’s SOL and BNB Chain’s 16% TVL rise during the same timeframe.
Ultimately, macroeconomic conditions remain the foremost factor influencing cryptocurrency demand. Nevertheless, when examining Ether derivatives data alongside Ethereum’s TVL performance, it appears that any potential downside for ETH’s price may be limited.
This article serves as a general informational resource and should not be construed as legal or investment advice. The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of any affiliated entities.