A day after Hong Kong announced the launch of a Spot Ethereum ETF, the world's second-largest cryptocurrency Ethereum (ETH) is once again under strong selling pressure. At the time of writing, Ethereum (ETH) price is down 4.53% as it attempts to find support near the $3,000 level.
Ethereum short positions rise
Recent market analysis provided by QCP Capital highlights the current sentiment surrounding Ethereum (ETH) in two key points.
- Ethereum’s risk reversal was particularly sharp in the negative direction on the front end, registering -12%. This change indicates that there is a significant level of nervous sentiment among investors and traders regarding the future direction of ETH price.
- Additionally, there is currently a shortage of Ethereum Gamma in the market, especially options with close expiration. This positioning suggests that large swings in ETH price, whether upward or downward, can potentially be amplified by existing market dynamics.
These observations highlight the cautious attitude prevalent in the Ethereum market. Despite the increase in short positions in Ethereum, the rate of discussion surrounding it is on the rise. As reported by on-chain data provider Santiment, Ethereum is currently experiencing the fastest rise in discussion rates.
As 🗣️ #cipher Prices are on a downward trend; #Ethereum Discussion rates are increasing the fastest.new #ETF Nevertheless, there is growing interest in the second-largest asset by market capitalization. #shorts It's rising rapidly.Also, please pay attention #beamThere is growing interest in https://t.co/0bfF7HR4lw pic.twitter.com/j6zyJqpiMT
— Santiment (@santimentfeed) April 16, 2024
ETH/BTC pair shows weakness
Ethereum's native token, Ether (ETH), has lagged behind Bitcoin (BTC) by about 6 percentage points since the crypto market's mid-March peak, according to a recent report from Grayscale Research. I am. Moreover, over the past three months, BTC price has surged 56%, while ETH price has lagged behind the 28% increase.
The current ETH/BTC ratio is hovering around 0.048 BTC, which is the same as in May 2021. The last time this happened, Ethereum price experienced two consecutive months of decline.
The difference in performance between ETH and BTC is due to several factors. While Bitcoin dominates the currency crypto sector, Ethereum faces significant competition within the smart contract platform crypto sector.
Furthermore, despite a notable increase in active users within the ETH ecosystem this year, the network's fee income has not increased commensurately. This is primarily because new activity is primarily occurring on layer 2 chains and sidechains rather than the Ethereum mainnet.
Additionally, it is believed that Ethereum is less likely to receive spot ETF approval, which may be contributing to Ethereum's underperformance. According to decentralized prediction platform Polymarket, consensus expectations for approval of the Spot ETH ETF have fallen by about 20% since January and are now at about 60%. A decision from the SEC regarding approval or rejection of the Spot ETH ETF is likely to be made by the end of May 2024.
ETH price fluctuation
Currently, on the technical chart, ETH price is consolidating in a descending wedge pattern. A break above the $3,750 level could signal the start of a long position. On the other hand, given the sustained weakness in the overall market, Ethereum price could extend its decline below the important 100-day simple moving average (SMA) level of $3,023. The optimistic outlook will be negated if the candlestick closes below $2,750.
The published content may include the personal opinions of the author and may be subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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