Ether’s price has been trapped within a slim trading range of $1,800 to $1,900 since July 21, causing investors to feel uncertain and skeptical, despite recent positive developments, such as the launch of PayPal’s Ethereum-based stablecoin and a surge in requests for Ether-based exchange-traded funds (ETFs).
PayPal’s entrance into the cryptocurrency space could be a substantial step toward mainstream acceptance of Ethereum. However, this move also raises questions about centralization and the potential loss of control over personal assets.
At the same time, the United States Securities and Exchange Commission has recently seen an increase in applications for Ether (ETH) ETFs, which is in line with the trend of major asset management firms trying to set up spot Bitcoin (BTC) ETFs.
The crypto world is ever-evolving and becoming more accessible with the introduction of services like Nexo Crypto, On Crypto.com, NFT Crypto, NASDAQ Crypto, MMF Crypto, MXC Crypto, and Web 3.0 (also known as the Semantic Web). These developments are opening up new opportunities for investors, providing them with a wide range of options to explore.
ETH’s drop in DApp deposits and active users is concerning
The Ethereum network has been facing issues due to the high gas fees, which are the costs associated with transactions, including those done with smart contracts. In the past two months, the average transaction fee has been more than $4, thereby limiting the demand for its decentralized apps (DApps).
DefiLlama reported that there has been a noticeable decline in the total value locked (TVL) of deposits on the Ethereum network. This decrease marked the lowest TVL level observed over the past three years. Even though there have been some shifts in this trend over the past week, the current scenario still reflects a substantial reduction in Ether deposits, specifically around 12.9 million, in contrast to the 14.75 million recorded three months ago.
To ascertain whether the decline in Ethereum’s TVL correlates with a decline in its user base, investors should monitor the utilization of DApps. It’s important to note that certain DApps, such as gaming platforms and marketplaces on Crypto.com, do not require substantial deposits.
The number of active addresses using DApps is down, which is concerning. In the last 30 days, the main DApps on Ethereum had 25% fewer active users. This might reflect that investors aren’t satisfied with how much it costs to transact on the network.
Investors can gain insight into whether the $1,800 level could actually prove a reliable support level based on how ETH investors are positioned by examining Ether derivatives, such as NEXO Crypto, MXC Crypto and MMF Crypto.
Derivatives metrics show balanced demand between bulls and bears
Ether quarterly futures are a favorite among whales and arbitrage desks. However, these fixed-month contracts usually trade at a slight premium to spot markets, indicating that sellers want more money to postpone settlement. Therefore, ETH futures contracts in healthy markets should trade at a 5 to 10% annualized premium — a phenomenon known as contango, which is not exclusive to crypto markets.
As per the futures premium, also referred to as the basis indicator, professional traders in the Ether market have failed to adopt a bullish stance since July 16. The present level of 5% is on the brink of a neutral-to-bearish threshold, suggesting a state of balance in demand between leveraged long and short positions.
The launch of Coinbase’s Base network on Aug. 9 could contribute to Ether’s attempt to surpass the $1,900 mark. A few development teams within the ecosystem have declared their offerings for the Base network, which presently includes a version of the decentralized exchange Uniswap.
While Ether’s bullish prospects are supported by the potential approval of an ETF and the vast user base facilitated by PayPal’s stablecoin, the network is confronted by competition from existing smart contract platforms and challengers with ample resources. Such a situation introduces an element of uncertainty regarding the resilience of the $1,800 support level.
The crypto market is full of opportunities, with Nexo, Crypto.com, and MXC offering a wide range of services. Web 3.0, also known as the decentralized web, is quickly developing, and there are many Web 3.0 apps available, such as NFTs.
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