Ether (ETH) has experienced a significant drop in price, falling by 21% from April 9 to April 14 and hitting a 50-day low. Although it has recovered some of its losses, Ether remains weak after failing to break through the $3,200 resistance level on April 14. Traders are now concerned about whether the $3,000 support level will hold. The approval of a spot Ether exchange-traded fund (ETF) in May is a topic of cautious optimism for investors, but the data from on-chain and derivatives sources suggest that there may be further corrections before the U.S. Securities and Exchange Commission (SEC) makes a decision.
Jan van Eck, CEO of VanEck investment firm, has expressed doubt about the approval of spot Ether ETFs in May. He points to the SEC’s lack of action on pending applications from major firms like BlackRock, Fidelity, ARK 21Shares, and VanEck as a reason for his skepticism. Eric Balchunas, a Senior Bloomberg ETF analyst, suggests that the absence of feedback from the regulator, even in face-to-face meetings, indicates low approval odds of around 35%. James Seyffart, another Bloomberg ETF analyst, adds that the SEC’s inactivity for months is concerning.
It would be too simplistic to attribute Ether’s recent decline solely to the uncertainty around spot Ether ETF approval, as Bitcoin (BTC) also experienced a 14% drop in the days leading up to April 13. A more detailed analysis should compare Ether’s performance against its competitors, particularly those involved with decentralized applications (DApps). Since April 9, Ether has seen a more significant decline of 15%, compared to the 8% drop in BNB and the 10% decrease in Tron. Solana, Has experienced a much steeper fall.
These figures do not necessarily reflect the activity levels within each network’s DApps. To get a better understanding, it’s important to examine the trends in total value locked (TVL) across these networks. According to DefiLlama, Ethereum’s network TVL reached its highest level in over 13 months on April 15, showing a 14.8% increase on a month-to-month basis. In comparison, the BNB Chain’s TVL remained stable, while Tron saw a slight decline.
To gauge professional traders’ sentiment toward Ether’s prospects, analyzing ETH options is crucial. A delta skew metric above 7% suggests expectations of a price drop, while a skew below -7% indicates a bullish outlook. On April 16, Ether’s options skew metric entered bearish territory, indicating that whales and market makers are seeking downside price protection on ETH.
The anticipation of a decision on the spot Ether ETF in May and the on-chain activity on the Ethereum network provide some support for Ether’s price. The growing risk aversion among professional traders on April 16, as shown by derivatives markets, suggests that further price corrections below $2,900 should not be ignored.
It’s a bloodbath out there for Ether holders. 💀