Ether (ETH) Faces Uncertainty Amidst Regulatory Challenges and Potential for Recovery to $1,850 Remains Uncertain
Summary:
Ether (ETH) experiences a critical test as its price drops but manages to recover slightly. Potential for a return to $1,850 remains uncertain due to regulatory challenges, declining smart contract activity, and high network fees. Derivatives metrics show reduced interest in leveraged long positions for Ether futures. Options market sentiment fluctuates, but overall, a rally to $1,850 appears unlikely in the near term. Inflationary pressures and macroeconomic factors offer potential catalysts. However, ongoing regulatory uncertainties and FUD continue to exert downward pressure on Ether's price.
Ether (ETH) faced significant challenges in recent days as its price plunged to the $1,530 support level. However, the altcoin managed to stage an impressive recovery, surging by 6% and sparking hope for a potential return to $1,850. To gauge this possibility, investors are closely monitoring ETH derivatives and network activity.
The ongoing inflation in the United States, which reached 3.7% according to the latest CPI report, has mitigated investor pessimism. Scarce assets, including cryptocurrencies, are expected to benefit from this inflationary pressure and expansive monetary policies. However, the crypto sector faces its own challenges, including regulatory uncertainties and high network fees, which dampen investor appetite.
Binance and its US branch are grappling with possible indictments and legal battles with regulatory bodies. Additionally, the Ethereum network has witnessed a decline in smart contract activity and persistent high fees. Top Ethereum dApps have experienced a decrease in active addresses, except for the Lido liquid staking project, which saw a 7% increase in value locked.
Vitalik Buterin, co-founder of Ethereum, acknowledged the need for the network to be more accessible for widespread use. However, he does not anticipate a viable solution to this challenge in the foreseeable future. Concerns about centralization and the dominance of services like Lido have raised legitimate concerns among investors.
Looking at derivatives metrics, Ether futures currently exhibit a lack of demand for leveraged long positions, indicated by the lowest premium in three weeks. In the options market, traders' sentiment can be determined by the 25% delta skew. While briefly shifting to a bullish stance, this sentiment has since waned, with both call and put options trading at a similar premium.
While there are potential catalysts for Ether, such as requests for a spot ETH exchange-traded fund (ETF) and macroeconomic factors, the dwindling use of dApps and regulatory uncertainties create a fertile ground for fear, uncertainty, and doubt (FUD). As a result, a short to medium-term rally to $1,850 seems unlikely.
Disclaimer: This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Published At
9/15/2023 6:45:39 PM
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