Ethereum’s (ETH) recent price correction has sparked concerns about its ability to regain bullish momentum. Despite a 5.2% decline on Friday, triggered by weaker-than-expected US labor market data, on-chain indicators suggest that the cryptocurrency remains well-positioned for a potential rally. In this article, we will delve into the factors contributing to Ethereum’s resilience and examine the market sentiment surrounding its future price movements.
Ethereum’s On-Chain Activity
A closer look at Ethereum’s on-chain activity reveals a robust and healthy network. The transaction count has increased by 32% over the past month, outpacing other major blockchains such as Solana and Binance Coin (BNB). Moreover, the number of active addresses on the Ethereum network has risen by 7%, while Solana’s user base has declined by 20% and BNB’s has contracted by 42%. This growth in on-chain activity is a positive indicator of Ethereum’s potential for price appreciation.
The total value locked (TVL) in Ethereum has also increased by 12% over the past 30 days, reaching $97.4 billion. This growth is largely attributed to the performance of decentralized finance (DeFi) protocols such as Pendle, Morpho, and Etena, which have seen significant gains in TVL. Ethereum’s dominance in the DeFi space remains intact, with a 60% market share of all TVL, or 67% when including its layer 2 ecosystem.
Derivatives Market Sentiment
The derivatives market, however, tells a different story. The monthly futures premium of ETH has dropped to its lowest point in two months, falling below the neutral 5% threshold. This indicates a lack of interest in leveraged bullish positioning, which could be a sign of caution among traders. Additionally, the net outflows from Ethereum exchange-traded funds (ETFs) in the US have totaled $505 million over four consecutive days, further contributing to the bearish sentiment.
Source: laevitas.ch
Options Market Analysis
To gain a more comprehensive understanding of market sentiment, it is essential to analyze the options market. The Ether 30-day options Delta Skew, which measures the difference between put and call option premiums, is currently at 4%. This indicates a moderate level of fear in the market, which is consistent with the past week’s trading activity. Notably, the demand for call options did not increase even when ETH reached its all-time high on August 24, suggesting that professional traders are hesitant to take on bullish positions.
Source: laevitas.ch
Stablecoin Activity
Stablecoin activity in China can also provide valuable insights into market sentiment. The Tether (USDT) stablecoin is currently trading at a discount of 0.5% compared to the official USD/CNY rate, indicating moderate selling pressure. This is consistent with the overall market sentiment, which is cautious due to uncertainty surrounding global economic growth, particularly after the US unemployment rate rose to 4.3% in August.
Source: Okx
In conclusion, while the derivatives market sentiment may appear bearish, Ethereum’s on-chain activity and options market analysis suggest that the cryptocurrency remains well-positioned for a potential rally. As the market continues to navigate uncertainty surrounding global economic growth, it is essential to monitor these indicators closely. For more information, visit https://cointelegraph.com/news/eth-s-aim-for-new-highs-possible-despite-concerning-macro
