Ethereum (ETH), the world’s second-largest cryptocurrency, experienced significant selling pressure on the market following Hong Kong’s announcement of launching Ethereum spot ETFs. Currently, Ethereum is declining by 4.53% and is attempting to stabilize around the $3,000 mark.
Ethereum Short Positions Rising
According to QCP Capital’s latest market analysis, Ethereum (ETH) is currently experiencing two significant trends shaping investor sentiment.
- Ethereum risk reversals have taken a sharp turn towards negativity, particularly in the front-end, registering at -12%. This shift indicates a notable level of nervous sentiment among investors and traders regarding the future direction of ETH prices.
Additionally, the market is currently short on Ethereum gamma, particularly in near-dated options. This positioning suggests that any significant movement in ETH prices, whether upwards or downwards, could potentially be amplified due to the existing market dynamics.
The data from observations in the Ethereum market highlight a note of caution. Although there’s an increase in short positions for Ethereum, there’s also been a growing interest in discussions about it. At present, Ethereum stands out as the topic of conversation with the swiftest uptick in discussion rates, according to reports from on-chain data provider Santiment.
With cryptocurrency prices decreasing, Ethereum is experiencing a notable increase in chatter. The introduction of a new Ethereum ETF has fueled this heightened interest in the second largest digital asset, despite a surge in short positions. Additionally, keep an eye on Beam as it gains traction.
— Santiment (@santimentfeed) April 16, 2024
The ETH/BTC Pair Shows Weakness
Based on Grayscale Research’s latest findings, Ethereum’s token Ether (ETH) has underperformed Bitcoin (BTC) by around six percentage points since the cryptocurrency market peak in mid-March. In the past three months, Bitcoin’s price has risen by an impressive 56%, whereas Ethereum’s price has only managed to increase by 28%.
The current ETH/BTC ratio is hovering around 0.048 BTC similar to what it was in May 2021. The last time this happened, the Ethereum price experienced two consecutive months of decline.
The disparity in performance between ETH and BTC is attributed to several factors. While Bitcoin dominates the Currencies Crypto Sector, Ethereum faces substantial competition within the Smart Contract Platforms Crypto Sector.
An extra point to consider is that although there has been a significant growth in the number of active users on the Ethereum network this year, the earnings from transaction fees have not kept pace. The primary reason for this discrepancy is that most new activities are taking place on Layer 2 solutions and sidechains rather than on the main Ethereum network itself.
In addition, the likelihood of Ethereum getting the green light for a spot ETF from the SEC has decreased as per public opinion, potentially causing its poor performance. Based on data from Polymarket, a prediction marketplace, there’s been a nearly 20% drop in optimism about spot ETH ETF approval since January. The SEC is predicted to make a decision on this matter by May 2024.
ETH Price Action
Right now, on the Ethereum price chart, there’s a narrowing trend forming known as a falling wedge. If the price breaks through the resistance of $3,750, it could indicate that it’s time to buy, signaling an uptrend. However, due to the ongoing bearish market conditions, Ethereum might continue to drop below its 100-day moving average at $3,023. If the price closes below $2,750, this bearish outlook could be reinforced.
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2024-04-16 11:59