Key takeaways:
- ETH derivatives metrics show that professional traders are holding steady and have not seen declines despite recent DeFi exploits.
- Ethereum’s 53% total market share and demand for institutional ETFs continue to provide support near $2,200.
Ether price rally has stalled, but ETH futures are far from bearish
The price of ether (ETH) failed to maintain its bullish momentum after reaching a high near $2,380 on Sunday. Repeated failures to break above $2,400 over the past four weeks have gradually eroded confidence, suggesting that professional ETH traders may jump higher despite several derivatives and onchain indicators supporting further growth.
ETH perpetual futures annual funding rate. Source: Lightness
The one-year funding rate for ETH perpetual futures was 5% on Tuesday, just below the neutral range of 6% to 12%. This indicator, while not particularly enthusiastic, has distanced itself from the bear-controlled negative financing rates seen last week.
ETH Option Put Rate in Deribit, USD. source: Laevitas
ETH option put (put) volume has remained lower than equivalent call (call) options on the Deribit platform since May 4. Demand for neutral to bearish strategies has been degenerating for three weeks, so ETH whales and market makers have not yet gone bearish.
Still, the lack of a bullish trend in ETH futures can be explained by external factors such as high oil prices and inflation concerns. The U.S. Consumer Price Index rose to 3.8% in April, its highest level in more than three years, due to rising energy costs.
The Bureau of Labor Statistics report also contained bad news for workers, as the real average hourly wage fell 0.5% from the previous month.
DeFi hacks and Ethereum Foundation sales impact investor sentiment
In addition to deteriorating macroeconomic conditions, the Ethereum ecosystem has faced internal struggles, including several hacks of decentralized finance (DeFi) protocols. The Kelp DAO rsETH bridge was exploited by spoofing LayerZero messages, it cost over $290 million from multiple lenders using fraudulent collateral, including market leader Aave.
Recently, the Ekubo protocol lost $1.4 million due to EVM v2 replacement vulnerabilities, while TrustedVolumes reported a loss of $6.7 million due to a bug in the protocol logic. These incidents are due to protocol-specific bugs and access control errors, rather than flaws in Ethereum itself, EVM security, or Layer 2 bridge designs.
The Ethereum Foundation’s recent ETH sale and subsequent sales withdrawal of $50 million caused discomfort among investors. Sentiment dropped again after an Ethereum ICO participant transferred 10,000 ETH to a recent wallet. Regardless of the reasons for these moves, fear and uncertainty remain heightened as ETH is trading 54% below its all-time high.
Related: North Korea “industrialized” cryptocurrency theft, laundered billions – CertiK
Blockchain Total Value Locked Market Share. source: DefiLlama
Ether’s strength lies in Ethereum’s 53% share of the Total Value Locked (TVL) market and its leading position in the decentralized application (DApp) business, considering the Layer 2 ecosystem. No competitor can match its institutional appeal, which is clear from the ETF’s $11.6 billion in assets under management.
Ultimately, the lack of bullish demand for leverage in ETH futures should not be viewed as waning interest from professional traders, so the path towards the $2,600 level and beyond remains open.
