Wednesday, September 27, 2023
HomeEthereumWeak stocks and declining DeFi use continue to weigh on Ethereum price

Weak stocks and declining DeFi use continue to weigh on Ethereum price

Of etherETH) The 12-hour closing price has respected the narrow range of $ 1,910 to $ 2,150 over 12 days, but strangely, these 13% fluctuations total 400 million in futures contracts since May 13. It was enough to liquidate $ 95 million. Coin glass..

Ether / USD 12 hours price at Kraken. Source: TradingView

The deterioration of market conditions was also reflected in digital asset investment products. According to the latest version of CoinShare’s Weekly Digital Asset Fund Flow Report, with crypto funds Investment products saw an outflow of $ 141 million During the week ending May 20th. In this example, Bitcoin (BTC) Was the focus of investors after experiencing a net redemption of $ 154 each week.

Russian regulation and collapsing US tech stocks exacerbate the situation

Regulatory uncertainty has squeezed investor sentiment after the updated version Russian mining bill It came to light on May 20th. Documents from the House of Representatives of the Russian Parliament did not include the obligation to register a cryptocurrency miner or a one-year tax amnesty. As quoted by local media, the State Department said these measures “could cost the federal budget.”

Additional pressure on Ether prices came from a 2.5% drop in the Nasdaq Composite Index on May 24th.In addition, tech stock-led indicators Pressured After the social media platform Snap (SNAP) plunged 40%, due to rising inflation, supply chain constraints and labor disruptions. As a result, the share of Meta Platforms (FB) decreased by 10%.

On-chain data and derivatives favor bears

The number of active addresses for Decentralized Applications (DApps) on the largest Ethereum network decreased by 27% from the previous week.

The most active DApp (US dollar equivalent) on the Ethereum network. Source: DappRadar

The most active decentralized applications on the network have significantly reduced users. for example, Uniswap V3 Weekly addresses fell by 24%, but Curve faced 52% fewer users.

Take a look at Ether’s futures market data to understand how professional traders, whales and market makers are positioned.

Quarterly futures are mainly used by whales and arbitrage desks due to the lack of variable funding rates. These fixed-month contracts usually trade at a small premium to the spot market. This indicates that the seller will demand more money to withhold payment for a longer period of time.

These futures should trade at an annual premium of 5% to 12% in a healthy market. This situation is technically defined as “contango” and is not limited to the crypto market.

Ether Futures 3 months annual premium. Source: Laevitas

Related: Bitcoin prices return to weekly lows of less than $ 29,000 as Nasdaq leads the US stock plunge

Ether’s futures contract premium fell below the 5% neutral market threshold on April 6. The current 3% basis index remains depressed, so there is a clear lack of confidence from leveraged buyers.

After testing $ 1,910 channel resistance on May 24, Ether could have risen by 2%, but on-chain data show no user growth and derivative data is bearish centimeters. Shows the ment.

There are morale improvements that encourage the use of decentralized applications, and it seems unlikely that the price will exceed the $ 2,150 resistance until Ether Futures Premium regains a neutral level of 5%.

The views and opinions expressed here are author It does not necessarily reflect the views of Cointelegraph. All investment and transaction movements carry risks. When making a decision, you need to do your own research.