Security or not, Ether looks poised to hold the $1.8K level based on 3 key metrics

Following the news of the United States Securities and Exchange Commission (SEC) taking legal action against cryptocurrency exchanges Binance and Coinbase, Ether’s price tested $1,780, but it is not unreasonable to suggest that Ether bulls should be pleased that its price did not dip below the 67-day support.

The SEC’s decisions have had a twofold effect on Ether (ETH), and some commentators on Crypto Twitter have suggested that the recent rise of Ether can be attributed to its exclusion from the cases brought against Binance and Coinbase. For example, the SEC named BNB (BNB), Solana (SOL) and Cardano (ADA), which are all competitors of Ethereum’s smart contract-processing capabilities, in those cases.

Despite analyst Jevgenijs Kazanins’ observation, the SEC’s lack of comment on Ether does not necessarily imply approval.

Kazanins poses the query of whether the SEC could be bringing a separate lawsuit against the Ethereum Foundation. At present, it is an unsubstantiated supposition, yet it is certainly worth considering given that SEC Chairman Gary Gensler declined to address inquiries regarding Ether’s status before the U.S. House Financial Services Committee in April 2023.

In the interim, traders should be concentrating on Ether’s price movements, network information, and other information which affects investor sentiment and price in the immediate future.

Ethereum DApps get a slight boost

The Total Value Locked (TVL) indicator, which tracks deposits held in Ethereum-based decentralized applications (DApps), has been declining since mid-March. On June 3, the TVL reached a low of 14.35 million ETH, but it recovered to 14.6 million ETH by June 6, according to DefiLlama.

The number of active addresses engaging with DApps has also declined. Over the past 30 days, the top 12 DApps running on the Ethereum network experienced a 4% rise in active addresses, despite the average transaction gas fee staying above $6.50.

If investors are concerned that Ether has a greater likelihood of dropping below the $1,800 support level, this should be reflected in the ETH futures contract premium and an increase in the expenses for protective put options.

Ether derivatives metrics neutral as regulations ramped up

Ether quarterly futures are favored by large investors and arbitrage desks. Nevertheless, these contracts with fixed delivery dates usually command a slight premium compared to spot markets, suggesting that sellers are requesting higher prices for deferred settlement.

As a result, in healthy markets, ETH futures contracts should be trading at an annualized premium of 4 to 8%, an occurrence known as contango that is not exclusive to crypto markets.

The basis indicator, which is a measure of the futures premium, has shown that professional traders have been avoiding taking long (bullish) positions with leverage. Even the retest of the $1,780 level on June 6 was not enough to make these large traders and market makers bearish.

In order to eliminate any external factors that may have solely influenced Ether futures, it is advisable to evaluate the ETH options markets. The 25% delta skew indicator evaluates comparable call (purchase) and put (sell) options and will become positive when there is fear present since the protective put option premium is higher than the call options.

The skew indicator will exceed 8% if traders anticipate an Ether price drop. Conversely, broad enthusiasm is mirrored in a negative 8% skew. As seen above, the 25% delta skew crossed the positive 8% boundary on June 5, signifying bearishness. Nevertheless, the bounce to $1,880 on June 6 caused the metric to revert to a neutral position.

Coinbase reminds the public that it sought to comply with regulations as the SEC brings charges of violations.

Ether’s price looks poised to hold above $1,800

In summary, these three signs point to resilience – specifically, the TVL recovery to 14.6 million ETH, the 4% rise in DApps’ active users, and a minimal effect on Ether derivatives markets despite testing the $1,800 threshold.

Data usage on the Ethereum network is still strong, and derivatives metrics suggest that experienced traders were not intimidated by the recent testing of the 67-day support.

As a result, bulls appear to have avoided a major setback, significantly decreasing the chance of an impending price decline.

Categorized in: