Ether Faces Uncertain Future Amid ETF Approval Speculation and Market Volatility
Summary:
Ether (ETH) saw a significant 21% drop in value from April 9 to April 14 and is still struggling, raising questions about whether its $3000 support will continue. Investor expectations are mixed over a possible spot Ether exchange-traded fund (ETF) approval happening in May, flagged by enigmatic data from on-chain and derivatives markets. Noteworthy financial analysts suggest that the Securities and Exchange Commission (SEC) might keep its pending non-responses to major firms’ ETF applications, thereby possibly keeping Ether unsettled. Despite the downturn, Ethereum's network activity remains relatively stable compared to competitors like BNB, TRX, and SOL.
Ether (ETH) experienced a significant 21% drop in value from April 9 to April 14, sinking to a 50-day low. While it managed to partially recover, its failure to break the $3,200 resistance level on April 14 has kept it weak. Market speculators are now unsure whether the $3,000 support will be sustained. Investor anticipation is high regarding a possible spot Ether exchange-traded fund (ETF) getting approved in May, but the hopes are tempered by enigmatic data from on-chain and derivatives markets, hinting at more price dips before approval by the U.S. Securities and Exchange Commission (SEC).
VanEck CEO Jan van Eck raised doubts over the likelihood of the spot Ether ETFs getting approved by the SEC in May, citing their ongoing non-responses to seven pending applications by significant firms like BlackRock, Fidelity, ARK 21Shares, and VanEck. Bloomberg ETF senior analyst Eric Balchunas pointed out a lack of "critical feedback" from the regulator as indicative of a slim chance of approval, estimated around 35%. Bloomberg ETF analyst James Seyffart followed this perception, wondering why the SEC hasn't acted for several months despite knowing this issue’s importance.
Blaming Ether's recent downturn entirely on feeble hopes of spot Ether ETF approval would be an oversimplification, especially considering Bitcoin also saw a 14% decline in the five days leading to April 13. A comparative analysis of Ether's performance with its direct competition like BNB, TRX, and SOL would provide more context.
Ether saw a 15% decrease since April 9, which was more noticeable than the 8% fall in BNB and a 10% dip in Tron. Interestingly, SOL saw an even more substantial drop. Despite these fluctuations, they don't necessarily indicate the activity levels within each network’s decentralized applications (DApps). Analysis of the total value locked (TVL) trends across these networks is critical.
Based on data from DefiLlama, Ethereum's TVL skyrocketed to its peak in over 13 months on April 15, hitting 16.4 million ETH - a 14.8% raise month-on-month. By comparison, BNB Chain’s TVL hardly moved, remaining at 9.5 million BNB, while Tron saw a 1% decrease in deposits in the 30 days leading to April 15.
Despite the initial analysis showing Ethereum's network as having an upper hand over the competition, further investigation is necessary. Not all DApps require a large deposit base, so it's crucial to gauge network activities by looking at transaction volumes and active user data.
DappRadar data highlights Ethereum's dominance, showcasing a $45.7 billion 7-day DApp volume, way above its main competitor, BNB Chain. Despite a slight 3% fall in active addresses since April 9, Ethereum’s decline was less severe compared to the BNB Chain, which experienced a 7% decrease.
A thorough analysis of ETH options is pivotal to determining whether experts have become more negative about Ether's future. In general, a delta skew measure above 7% signifies expected price reduction, while a skew below -7% implies a bullish forecast.
On April 16, Ether’s options skew metric hit a two-month high, showing bearish signs after hovering around the 7% mark for four days. This trend insinuates whales and market-makers are seeking a premium for down-side protection on ETH.
Overall, hopes of a May decision on the spot Ether ETF props up Ether's price while Ethereum's network on-chain activity remains relatively stable compared to its competitors'. However, the escalating risk aversion among professional traders as of April 16, as mirrored in derivatives markets, indicates potential further price dips for ETH beneath $2,900 mark.
Readers shouldn't treat this article as financial advice or recommendations. Every investment and trading action carries inherent risk. Readers should conduct their own due diligence before making any decision.
Published At
4/16/2024 7:52:19 PM
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