Surprising Short-Term Price Action of Ethereum

The price of Ether has been unable to surpass $2,350 for the past 15 days, but some traders are hopeful that the recent rally on February 6th could lead to a more significant change in the trend. These traders are closely monitoring the impact of Solana’s network outage and the substantial outflow of Ether from exchanges. They are questioning whether Ether can increase by another 10% to reclaim the $2,650 level seen on January 12th. Despite these uncertainties, Ethereum remains the dominant player in decentralized applications (DApps) in terms of DApp deposits or total value locked (TVL), with a 57.8% market share of $34.8 billion. When layer-2 solutions like Polygon, Optimism, and Arbitrum are included, Ethereum’s dominance extends to 67.4%. Although the high fees of Ethereum may deter some DApp users, data shows a large number of active addresses engaging with its DApps, especially when considering layer-2 scalability alternatives.

The flow of assets on exchanges and staking metrics also play a crucial role in determining Ether’s price. Despite the Solana outage, it had no measurable impact on deposits or SOL’s token price, highlighting the importance of monitoring exchange deposits and staking metrics. The lower the availability of coins, the greater the price impact when there is a surge in demand. Recent data shows that Ether exchange net flows have reached their lowest levels in over a year, with net withdrawals amounting to 7 million ETH since April. This suggests that there is low demand from holders to sell their coins. Examining Ethereum staking flows can provide further insights into the sentiment of ETH holders. An increasing total deposit in staking is generally seen as bullish for Ether’s price, and data shows that there is currently a record high of 29.6 million ETH locked in staking.

To determine whether Ether investors have turned bullish, it is important to analyze the BTC futures premium, which measures the difference between fixed-month contracts and their spot price. The ETH futures premium has stabilized at 7% on February 6th, indicating a balanced demand for both long and short positions. By examining the ETH options markets, it is possible to gauge investor sentiment further. The delta skew indicator, which compares call and put options, has remained neutral since February 2nd. This suggests that there is no overwhelming fear or optimism at the current price level.

While there are hopeful signs for Ether’s price to continue its upward momentum, there are also factors that indicate moderate distrust among traders. The market is closely watching for any significant developments that could surprise professional traders.