Ether (ETH) has seen a significant decline of 14.8% between April 13 and April 14 and has since been trading below $3,300. Whenever the price of ETH tested the $3,000 level, buyers stepped in to provide support. However, there are concerns among some traders that without a stronger narrative, ETH may struggle to reclaim $3,500.
Analyst DeFiSurfer808 suggests that the weakness in Ether’s price compared to Bitcoin (BTC) is due to a lack of fresh fundamentals. According to DeFiSurfer808, the Ethereum native token lacks “some new narrative and flows.”
Ethereum has been grappling with ongoing regulatory uncertainty, which has contributed to its underperformance compared to Bitcoin. In April, Jan van Eck, the chief investment officer of VanEck investment firm, mentioned that U.S. requests for a spot Ether ETF might be rejected in May. This followed a period of inaction by the U.S. SEC regarding pending applications for spot Ether ETFs.
The regulatory landscape has also been causing concerns for investors in the broader Ethereum ecosystem, including layer-2 solutions, decentralized finance (DeFi), and nonfungible token (NFT) marketplaces. Uniswap Labs, for example, received a potential enforcement notice from the U.S. SEC and announced that it was prepared to fight back.
However, there are signs that the regulatory landscape may be shifting. Lead SEC attorneys in a lawsuit against crypto platform DEBT Box resigned after reports of “gross abuse” of power. Additionally, the Blockchain Association and the Crypto Freedom Alliance of Texas have filed a lawsuit against the SEC, challenging its broad interpretation of the term “dealer” within the Securities Exchange Act of 1934.
Despite these regulatory challenges, on-chain and derivatives data for Ethereum paint a different picture. The total value locked (TVL) in Ethereum smart contracts reached its highest level since July 2022, indicating increased demand for Ethereum decentralized applications (DApps). Innovative platforms such as EigenLayer, Uniswap, Pendle, and Renzo have contributed to this growth.
To gauge market sentiment, the ETH options 25% delta skew can be used as a proxy. An increase in skew suggests anticipations of a price drop, while a negative skew reflects bullish sentiment. Currently, the Ether options skew metric indicates a balanced dynamic between call and put options, suggesting a neutral market sentiment.
While on-chain metrics for Ethereum and ETH derivatives remain resilient, it may be premature to expect a bull run surpassing $3,500. The subdued investor enthusiasm regarding the prospects of a U.S. spot Ethereum ETF approval is a factor contributing to this cautious outlook.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.