Ether Fluctuates Amid Regulatory Uncertainty and Lack of New Fundamentals
Summary:
Ether (ETH) has been fluctuating below the $3,300 mark since a 14.8% drop between April 13 and 14. As the Ethereum native coin lacks new narratives and flows, it underperformed Bitcoin by 16% in the last two months. Regulatory uncertainties further impact ETH, especially with possible disapproval of ETF requests in May. On-chain metrics and ETH derivative data remain resilient despite these challenges. However, continued Ether growth surpassing $3,500 is uncertain due to muted enthusiasm about U.S. spot Ethereum ETF approval outcomes.
Between April 13 and April 14, Ether (ETH) witnessed a significant plunge of 14.8%, and since then, its value stayed below the $3,300 mark. Whenever the cost of ETH came close to $3,000, buyers stepped in, bolstering the support line. However, the prospect of ETH returning to above $3,500 is a cause of concern for some traders, due to the need for a more compelling narrative. DeFiSurfer808, an analyst, voiced the belief that Ether's relative feebleness against Bitcoin (BTC) is down to a scarcity of fresh fundamentals, emphasizing that the native Ethereum token needs "a new narrative and flows."
In the past two months, Ether has languished by 16% when compared to Bitcoin, an aspect that grew stronger following comments from VanEck's Chief Investment Officer, Jan van Eck, on April 9. Van Eck speculated that the U.S. may deny requests for a spot Ether ETF in May. The U.S. SEC has remained idle regarding seven Ether ETF requests, raising concerns. Irrespective of Ether's categorization as a non-security asset, the ongoing friction between regulators and exchanges somewhat quells the investor interest in the broader Ethereum ecosystem, which includes layer-2 solutions, Decentralized Finance (DeFi), and nonfungible token (NFT) marketplaces.
On April 11, after receiving a possible enforcement notice from the U.S. SEC, Uniswap Labs declared its readiness to fight back. Without revealing the specifics, they nevertheless maintained in a blog post that UNI is not a security and that their platform does not qualify as either a securities exchange or broker under U.S. law.
Regulatory conditions, meanwhile, appear to be evolving. When a Bloomberg report uncovered "gross abuse" in the case they handled against the crypto platform DEBT Box, SEC's lead attorneys, Michael Welsh and Joseph Watkins, resigned on April 22. In March, federal Judge Robert J. Shelby punished the SEC for false statements and misrepresentation in their lawsuit.
At present, the SEC faces another lawsuit from the Blockchain Association and the Crypto Freedom Alliance of Texas. They are disputing the regulator's expanded interpretation of the word "dealer" in the Securities Exchange Act of 1934, asserting that this broad application creates a vague and onerous regulatory environment for digital asset businesses.
Ether's on-chain and derivatives data present an alternate storyline. On April 23, ETH's price bounced back above $3,200 driven by a surge in demand for Ethereum decentralized applications (DApps). As DefiLlama reports, the network's smart contract deposits, tracked by the total value locked (TVL), hit a high since July 2022, with 30.2 million ETH on April 22, up by 8% compared to the previous month.
The growth of Ethereum's TVL stands out due to innovation-driven platforms like EigenLayer's staking solution, Uniswap (a decentralized exchange), Pendle (an automated yield provider), and Renzo, a liquid staking application. In contrast, the Tron blockchain experienced a 5% decline in TRX terms over the last 30 days, with the most significant DeFi application, JustLend, seeing an 11% deposit reduction.
To gauge whether expert traders have become bearish following Ether's price decline, the ETH options 25% delta skew can be utilized. A skew metric exceeding 7% indicates price drop predictions, while a negative 7% skew generally signifies bullish sentiments.
From April 9 to 18, the Ether options skew metric showed a rise, hinting at a less risk-averse trend among traders. However, this trend reversed on April 19 as ETH traded beneath $3,000. Current data portray an equilibrium between call (buy) and put (sell) options, suggesting a neutral market sentiment.
Despite Ether's price struggling to uphold the $3,000 support level recently, Ethereum's on-chain metrics and ETH derivatives exhibit stability. Yet, predicting a bull run exceeding $3,500 could be premature given the muted investor fervor regarding a U.S. spot Ethereum ETF approval. This article does not offer investment advice or suggestions. Like all other kinds of investment, cryptocurrency trading is also marked with risks, and potential investors should carry out independent research before a decision is made.
Published At
4/23/2024 8:56:57 PM
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