Ethereum is currently making headlines for all the wrong reasons. The price of the cryptocurrency has dropped almost 50% over the past few months, and many traders are beginning to question the future of the Ethereum network, especially in the wake of the DAO hack and the failed Constantinople fork. However, despite these setbacks, it is important to remember that Ethereum is still a live project, and that the network is far from finished. Like the internet itself, Ethereum is an evolving system, and there is still plenty of room for growth, especially with regards to the network’s scalability.
After rising from $12 to $18, Ethereum is now trading at $13.50, down from its high of $375. Ethereum has been highly volatile since its introduction at the end of 2015, with the price falling from $13 to $2.70 within a few months. During the fall, the developers of Ethereum posted a blog post explaining why the price was so low, but a lot of people later disputed the reason.
Ether (ETH) is a token that runs on the Ethereum blockchain, and was created in 2015 by Vitalik Buterin. The Ethereum blockchain is a decentralized, public virtual machine that allows anyone to create the next generation of decentralized applications. Its platform is designed to run smart contracts, which are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.Ether (ETH) has outperformed Bitcoin (BTC) by 32% since May, and despite a steady stream of bullish reports from JPMorgan and Goldman Sachs, derivatives metrics show evidence of a bearish stance on both assets. Ether and bitcoin price movements since May. Source: TradingView Bitcoin is trading 41% below its all-time high of $64,900, pushing the cryptocurrency fear and greed index to its lowest level since March 2020. At a time when the trading industry fears a crash, professionals like global investment firm Guggenheim Investments have filed a new fund with the U.S. Securities and Exchange Commission that could be aimed at backing bitcoin. Billionaire investor Stanley Druckenmiller reiterated his bullish stance on bitcoin: I think BTC has won the game of value retention because it is a brand, it has been around for 13-14 years, and it has a limited supply.
The momentum of the Ethereum network has been excellent
Ethereum has overtaken Bitcoin in terms of mining revenue and network value transaction volume after a report from Goldman Sachs revealed that the global investment bank believes Ether has a strong chance of overtaking Bitcoin as the dominant store of value. The report highlights the growth of the decentralized financial sector and the Ethereum-based ecosystem of non-gaming tokens. Income of Bitcoin and Ethereum miners, USD per ton Source: CoinMetrics In May, Ethereum miners’ earnings were much higher than Bitcoin miners, averaging $76 million per day. This amount exceeds the $45 million in revenue from bitcoin miners, including $6.25 in subsidies per block, plus transaction fees. Also the number of transactions and transfers in each network. For the first time, Ethereum showed a significant advantage in this metric. Average daily transactions on Bitcoin and Ethereum networks, in USD per day Source: CoinMetrics The chart above shows that the Ethereum network brews an average of $25 billion per day, 85% more than bitcoin. Stubblecoins have certainly played an important role, but so has the $50 billion net worth of decentralized financial applications.
Term premium slightly reduced
When the premium of a futures contract is measured, Bitcoin and Ether show similar levels of bearish sentiment. The base rate measures the difference between long-term futures contracts and the current spot market level. A one-month futures contract typically trades at a 10-20% premium to traditional cash trading to justify holding funds rather than paying immediately. Annual premium for OKEx bitcoin and ether futures (basic). Source: Skewed As noted above, the futures premium has remained stable since the collapse of the 19. May for Bitcoin and Ether below 10%. This indicates a slight downward trend, which is however far from the negative indicator known as backwardation.
Delta shift of 25% of Ethersignals is feared
To evaluate the optimism of an Ether trader, let’s look at the 25% skew delta. The metric becomes positive when the premium for puts with neutral or bearish risk is higher than the premium for calls with similar risk. Such a situation is generally considered a fear scenario. In contrast, a negative skew implies higher hedging costs and indicates a bullish bias. Options Ether 25% delta skew. Source: Laevitas.ch Like the futures premium, the 25% delta skew in ether options has fluctuated since FY19. Maybe more than 10%. This suggests that market makers and whales are unwilling to provide downside protection, indicating fear. While the situation is far from extremely unfavorable, both Ether-derived indicators show a complete lack of bullish sentiment, despite the altcoin’s 270% rise so far. In light of this disappointing data, some analysts believe the glass is half full because it leaves room for a positive surprise. The Ethereum 1559, or EIP-1559, enhancement proposal expected in July will create a base network fee that will fluctuate based on network demand. The update also proposes to burn transaction fees, introducing deflation to the Ethereum ecosystem. According to OKEx analyst Rick Delaney, this could increase the asset’s appeal among the world’s wealthiest investors. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.One of the most important aspects of technical analysis is understanding the price action of the asset in relation to the fundamentals. In the case of Ethereum (ETH), the fundamental story has been obviously positive, with the network having experienced a massive price rise over the last few months. But the pro technical traders, who have access to strong tools, are still bearish on the asset.. Read more about what is eth all-time high and let us know what you think.
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