Source: Cointelegraph Original: "{title}"
The price of Ethereum has risen 6.4% from a low of $1,768 on March 30, but the token still struggles to break through the $2,000 mark. Some traders believe this decline is partly related to the shrinking memecoin market, which, although not limited to the Ethereum network, has significantly reduced the activity in the decentralized applications (DApps) ecosystem and the broader crypto market.
Currently, Ethereum is down 44% year-to-date, and derivatives indicators show that traders are far from bullish and lack confidence in a recent strong rebound. Evidence of this can be found in the premium of Ethereum futures relative to the spot market.
Although this premium rose to 4% on April 2, up from 2% on March 31, it remains below the neutral threshold of 5%. This data indicates that while the support at $1,800 is gradually strengthening, Ethereum investors are still far from turning bullish.
Ethereum 2-month futures annualized premium. Source: Laevitas.ch
To assess whether whales and market makers lack confidence in Ethereum's performance, one can analyze the Ethereum options market. Under neutral conditions, a 25% delta deviation should remain balanced between call options (buy) and put options (sell), typically ranging from -6% to 6%.
Deribit Ethereum 30-day options 25% delta deviation (put-call). Source: Laevitas.ch
The delta deviation indicator for Ethereum has retreated from 9% on March 31, but the current reading of 7% indicates that risk-averse sentiment remains strong. The rising cost of hedging suggests that whale investors are concerned about further declines in Ethereum's price, implying that traders may need more time to regain confidence.
Despite a 49% drop in Ethereum DApps revenue between January and March, Ethereum's adoption remains strong. Although reduced network activity has limited the influx of new users and suppressed overall demand for Ethereum, its advantages over traditional financial markets and its dominance in the decentralized finance (DeFi) space remain unchanged.
The amount of stablecoins on Ethereum is close to a historical high of $124.5 billion, and Ethereum remains the undisputed leader with a total value locked (TVL) of $49 billion. These figures indicate that Ethereum's adoption still has significant potential, especially as new use cases continue to emerge, such as structured products and more complex DeFi applications utilizing synthetic assets.
Despite early challenges in metaverse applications, declining interest in memecoins, and a sharp drop in activity in the non-fungible token (NFT) market, the Ethereum network continues to expand.
Ethereum funding rates neutral, ETFs dampen retail trading enthusiasm
In addition to focusing on the positions of professional traders, assessing retail investor sentiment is also valuable. Perpetual futures (inverse swaps) typically closely follow spot prices, as leverage imbalances are adjusted through a fee known as the funding rate, which is charged every 8 hours. In a neutral market, this rate usually fluctuates between 0.1% and 0.3% over a 7-day period.
Ethereum 8-hour perpetual futures funding rate. Source: Laevitas.ch
Since March 31, the funding rate for Ethereum perpetual futures has remained neutral, indicating that retail investors have not attempted to bottom-fish during price declines. A key factor in the lack of enthusiasm is the net outflow of $37 million from spot Ethereum exchange-traded funds (ETFs) over the past two weeks.
Although derivatives data is typically lagging and does not necessarily mean that Ethereum's price will continue to decline, considering the Trump family's World Liberty Financial investment in Ethereum and Eric Trump's public support for Ethereum's positive momentum, market sentiment could shift rapidly. Currently, both professional traders and retail investors remain cautious about the price outlook for ETH.
Related: Did ChatGPT come up with Trump's tariff rate formula?
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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