Ether Price Metrics Signal Imminent Volatility in ETH Market

Ether’s Price Faces Challenges in Climbing Back to $1,850: Here’s Why

Ether (ETH) experienced a significant test on September 11 when its price dropped to the $1,530 support level. However, the altcoin managed to recover by surging 6% in the following days. This recovery may indicate a crucial moment for Ether after enduring losses of 16% in the past month (via Cointelegraph).

Macroeconomic factors, such as rising inflation in the US, have played a role in mitigating investor pessimism. The recent Consumer Price Index report revealed that inflation reached 3.7% for the second consecutive month. This data reinforces the belief that the US government’s debt will continue to rise, leading to higher yields.

However, the cryptocurrency sector, including Ether, faces its own challenges. Regulatory uncertainty and high network fees have limited investor appetite. Binance, for example, is facing the possibility of indictment by the US Department of Justice. Binance.US is also entangled in legal battles with the US Securities and Exchange Commission, resulting in layoffs and the departure of top executives.

Additionally, the Ethereum network has seen a decline in smart contract activity, which is crucial to its original purpose. High average fees, averaging above $3, continue to plague the network. Over the past 30 days, the top Ethereum decentralized applications (DApps) have experienced a 26% decrease in active addresses. The only exception to this trend is the Lido liquid staking project, which saw a 7% increase in total value locked (TVL) in ETH terms. However, Lido’s dominance, accounting for 72% of all staked ETH, has raised concerns about centralization and the influence of services like Lido.

Vitalik Buterin, co-founder of Ethereum, recognizes the need to make Ethereum more accessible for everyday people to run nodes in order to maintain decentralization. However, Buterin does not anticipate a feasible solution to this challenge within the next decade. Consequently, investors have legitimate concerns about centralization and the dominance of certain projects.

A closer look at derivatives metrics reveals reduced interest from leveraged longs in ETH futures and options. The premium for ETH futures hit its lowest point in three weeks at 2.2%, indicating a lack of demand for leveraged long positions. Even with the 6% gain following the retest of the $1,530 support level, ETH futures did not reach the 5% neutral threshold.

Analysis of the options markets shows that professional traders are displaying reduced interest in leveraged long positions. The Ether 25% delta skew indicator briefly shifted to a bullish stance on September 14 due to put options trading at an 8% discount compared to similar call options. However, this sentiment waned on September 15, with both call and put options trading at a similar premium.

While Ether has potential catalysts in the form of a spot ETH exchange-traded fund and macroeconomic factors driven by inflationary pressure, the dwindling use of DApps and ongoing regulatory uncertainties create an environment of fear, uncertainty, and doubt (FUD) that is likely to exert downward pressure on Ether’s price. As a result, a rally to $1,850 in the short to medium term appears unlikely.

It’s important to note that this article is for general information purposes and should not be considered legal or investment advice. The views expressed here are the author’s alone and do not necessarily reflect the views of Cointelegraph.

Sources: [Cointelegraph](, [DappRadar](, [Laevitas](, [Cointelegraph](

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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