Despite a significant surge in Ethereum’s (ETH) price over the past month, traders remain cautious about the cryptocurrency’s potential for further growth. The price of ETH has increased by 56.5% in the last 30 days, but derivatives data suggests that traders are not optimistic about its ability to break the $4,000 threshold, which it has repeatedly failed to surpass since March 2024.
One key indicator of this caution is the annualized funding rate for ETH perpetual futures, which has fallen to 9%. This rate, which measures the cost of maintaining a leveraged position, was previously at 19% just a few days ago, indicating a decrease in demand for bullish positions. This decrease is unexpected, given that ETH has gained 46% since July 7.
Another factor contributing to traders’ disappointment is the decline in Ethereum’s network activity. The total value locked (TVL) in the Ethereum ecosystem has fallen to a five-month low of 23.4 million ETH, representing an 11% decrease in network deposits. In contrast, other blockchain platforms like Solana and BNB Chain have seen more stable or even increasing TVL, with Solana’s TVL dropping by only 4% and BNB Chain’s deposits growing by 15%.
Ethereum has also lost its leading position in terms of decentralized exchange (DEX) volume, with Solana and BNB Chain surpassing it in recent activity. This decline in network activity is a concern for investors, as it may indicate a lack of adoption and usage of the Ethereum platform.
To better understand the sentiment of ETH whales and market makers, it’s essential to analyze the ETH monthly futures market. Typically, these contracts trade at a 5-10% annualized premium, but currently, the ETH futures annualized premium is at 6%, down from 8% earlier this week. This decrease in bullish leverage demand is notable, especially given the recent inflows into ETH exchange-traded funds (ETFs).
The lack of enthusiasm for ETH at its current price may be due to concerns about the platform’s competitiveness, particularly compared to Solana and BNB Chain, which are perceived as more user-friendly due to their higher capacity at the base layer. Additionally, the recent surge in ETH price may be attributed to corporate treasury holdings, which have accumulated significant amounts of ETH. While this buying activity may continue to drive up the price, traders remain skeptical about ETH’s ability to reach $4,000, and it’s unclear whether this momentum can be sustained.
In conclusion, despite the recent price gains, Ethereum’s derivatives data and network activity suggest that traders are cautious about the cryptocurrency’s potential for further growth. The decline in TVL, DEX volume, and the annualized funding rate all indicate a lack of optimism among traders, and it remains to be seen whether ETH can break through the $4,000 threshold and sustain its momentum.
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