Recently the price of the second most famous cryptocurrency, Ethereum, has increased by 60 percent. It has also outperformed the BTC, which is currently trading sideways. As per the different tools and analysis, it is found that Ethereum Derivatives lack support as the smart contract deposits have become quite less. Also, there is extreme sell pressure on the swing traders.
After announcing their final testnet merge on the Beacon chain, it led to a bit of positive growth in the price. The merge is to transform Ethereum from a Proof of Work Consensus Algorithm to a Proof of Of Stake. On July 14, the core developer team at Ethereum announced that by September 19, the merge would happen.
Three crucial indices for Ether derivatives suggest weak support for $1,600 ETH
The result of this can lead to a reduction in 90 percent of the total supply of the network as there will be a change in the monetary policy. This would create a bullish catalyst.
The Terra Luna Failure in May this year has benefitted the TVL(Total Value Locked) on Ethereum. Investors now have invested their funds in the Ethereum Network rather than Defi Applications. The reason is robust security and fully tested defi applications like MakerDAO (a project which launched DAI stablecoin).
According to the statistics, Ethereum Network has 59 percent of TVL in the crypto and Blockchain Applications. It rose from 51% as per the data and analysis done by DefiLlama. However, the current value of TVL (40 Billion USD) on the smart contracts is still quite less compared with the 100 USD Billion TVL in December 2021.
The demand for Defi applications has decreased as a result of Crypto Winter. Also, the gas price skyrocketing a few months back is reduced heavily to 0.90 USD. There could also be another reason for the gas drops, such as using layer two solutions like Arbitrum and Polygon.
Margin Traders Are Not Placing Any Bullish Bets
One should learn more about margin tradings to understand and verify the price movements. Lending allows traders to leverage their position to buy more amount of tokens. People are quite advanced traders who open margin longs, and their gain or loss highly depends on the Ethers Price.
On BitFinex, one of the popular cryptocurrency exchanges, margin traders create position contracts for at least 100,000 Ethereum or more in a very short duration. This indicates the significant participation of the huge arbitrage desks and big whales.
At the beginning of July, the margin longs were at an all-time high of 500,000 ETH. This was the highest level this year since November 2021.
Option Traders might exit the “fear zone” as traders seem neutral.
Per the chart analysis done by the traders, there is a 25 percent delta skew, signaling that professional traders were overcharged for their positions. If traders expect Ether price to rally, the skew indicator will lower by 12% or more, whereas if it resists bullish strategies, it will move 12 percent up or more.