Ethereum's Dominance in Market and Increased Staking May Potentially Boost Ether's Value
Summary:
Despite failing to close above $2,350 for over two weeks, some traders anticipate Ether's positive momentum could continue. Influences on this trend include a recent Solana network outage and a sizeable Ether outflow from exchanges. Ethereum continues to lead in DApp deposits with a significant 57.8% market share. An increase in Ethereum staking activities and a balanced demand in Ether's futures and options markets also indicate a potential rise in Ether's value. Despite the uncertainties, if Ether's positive progression continues, it could surprise professional traders.
Ether's value has struggled to surpass the $2,350 mark for the past two weeks, however, certain traders hold out hope that the rally on February 6 might cause a significant transformation in the situation. They are assessing whether the recent disruption of the Solana network and the large outflow of Ether from trading platforms last week will impact the market. Questions also linger if Ether can rally an additional 10% to regain its standing at the $2,650 mark, last seen on January 12.
Ethereum continues as the top choice for DApp. On February 6, Solana's network was offline for five hours, interrupting block creation and leading to several platforms halting deposits and withdrawals of SOL and other Solana-based tokens. The continual difficulties endured by Ethereum's competition to keep operations going during maximum has underscored Ethereum's supremacy in decentralized applications (DApps).
A view expressed on the X social media platform by user @tytaninc defends Ethereum against criticisms concerning its congestion and high costs. When considering DApp deposits or total value locked (TVL), Ethereum has an impressive 57.8% market share, amounting to $34.8 billion. If one were to also take into account layer-2 solutions like Polygon, Optimism, and Arbitrum, Ethereum's dominance expands to 67.4%, as per DefiLlama data.
The topic of whether the regular DApp user on Ethereum would be willing to pay the network's considerable average transaction fee of $5.85 is up for debate. Nevertheless, reports show that Ethereum had 382,490 active addresses interacting with its DApps just in the past week, headlined by Uniswap, 0x Protocol, Metamask Swap, OpenSea, and 1inch Network. Intriguingly, when compiled together with the layer-2 scalability alternatives of the system, active addresses climb above 2 million, according to DappRadar data.
Despite whatever DApp statistics suggest, the flow of assets remains the definitive determinant of price. For instance, the latest Solana outage did not noticeably affect the network's deposits or the price of the SOL token. This emphasizes the importance of watching exchange deposits and staking metrics. Reductions in readily available coins can have a positive effect on price when demand increases.
Recent Ether exchange net flows illustrate reserves dropping to their lowest levels in more than a year. Net withdrawals total 7 million ETH since April, indicating a lack of desire among holders to sell their coins. To delve deeper into how ETH holders feel about selling, it's worth studying Ethereum staking flows. Staking is a core function of the Ethereum network, where coins are secured to validate transactions using the Proof-of-Stake consensus. Generally speaking, an increasing total deposit in staking is viewed as positive for the price of ETH. StakingRewards data reveals a record-breaking figure of 29.6 million ETH currently staked, a rise from 28.9 million the previous month.
To determine the current sentiment among Ether investors, one can examine the BTC futures premium, also known as the basis rate. In normal markets, fixed-month contracts should have a premium of 5% to 10% due to their longer settlement period. Eth futures saw their premium stabilize at 7% on February 6, showing a slight improvement from two days prior, indicating balanced demand for buying and selling leverage during the last week.
To eliminate external factors that might have influenced only the Ether futures, one can scrutinize the ETH options markets. The 25% delta skew metric compares similar buy and sell options and will turn positive when market anxiety is high. As depicted above, the delta skew has been neutral since February 2, falling within the neutral -7% to +7% range. Bulls are delighted with the 3.9% gains above $2,350 on February 6, which didn't result in a higher demand for protective put options. However, the Ether futures and options metrics do not show any clear signs of optimism, indicating some level of skepticism regarding the current price. In conclusion, if Ether's positive momentum endures, professional traders might be caught off guard. Note that this article does not offer any investment suggestions or advice. Every investment and trading decision carries risk, and it is recommended that readers carry out their own studies before making a decision.
Published At
2/7/2024 12:38:32 AM
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