Key takeaways:

• The ETH futures premium and put option swing indicate that investors are aggressively hedging despite an 8% price rebound.

• Weekly Ethereum fees dropped 49% in the face of weakened DEX activity, while Tron and Solana fees increased 9%.

Ether (ETH) gained 8% on Tuesday but stopped near $3,000 as derivatives markets signaled doubts about further gains. The move followed a broader rally in cryptocurrencies as investors priced in greater chances for fresh economic stimulus, especially after Monday’s tensions in the Japanese government bond market.

Sentiment improved as investors became more confident that US monetary policy would become less restrictive. The Federal Reserve (Fed) ended its balance sheet reduction program on December 1, and investors expect interest rates to be cut on December 10. More importantly, major U.S. financial institutions have rapidly increased their employ of repurchase agreements, increasing liquidity in short-term financing markets.

The tech-heavy Nasdaq index has recovered most of its November losses and is now only about 3% below its all-time high. Still, ETH derivatives positioning remains narrow, suggesting confined confidence among bullish traders.

On Tuesday, the annual premium of monthly ETH futures compared to spot markets remained at 3%, unchanged from the previous week. Readings below 5% indicate very delicate demand for leveraged long exposure, which is an understandable result considering the 22% decline in the price of Ether over the last 30 days.

Ether lags equities as global politics turns expansionary

Ether’s destitute performance relative to the US stock market raises concerns, especially as central banks signal more expansionary economic actions.

On December 1, the Fed provided $13.5 billion in overnight funding, the second highest level in more than five years. Designed as a liquidity hedge, the facility once provided more than $2.5 trillion in free cash flow in 2022 following stimulus measures and extremely low interest rates. However, these balances were later withdrawn as participants sought higher profits elsewhere.

Additional factors may impact cryptocurrency demand, including concerns about overinvestment in artificial intelligence infrastructure and renewed regulatory pressure on stablecoins. China’s central bank also pledged to step up activities related to money laundering and unauthorized cross-border transfers involving digital assets.

Professional Ether investors remain concerned about the risk of loss, as reflected in continued stress in options markets.

ETH put (put) options trade at a 6% premium to comparable call (call) contracts, which is typically associated with bearish conditions. For comparison, on Friday the skewness index was a neutral 4%. This change suggests that something is still holding back investor optimism, even as the rally in U.S. stocks signals improving risk appetite in time-honored markets.

Ethereum network fees fell to their lowest level in more than three years, falling to $2.6 million in seven days, down from $5.1 million four weeks earlier. Some of this decline reflects a decline in activity on decentralized exchanges, where volume fell to $13.4 billion over the same period after peaking at $36.2 billion in August.

Related: Ether Price Analysis – Will ETH Continue to Fall in December?

More worryingly, rival networks Tron and Solana have seen a 9% escalate in seven-day fees, according to Nansen’s data. The dormant movement of ethereal whales on Sunday increased investor anxiety. An entity that has been operating since Ethereum’s 2015 genesis lock moved 40,000 ETH to a fresh address, sparking speculation about a potential sale.

The Fusaka Ethereum update, scheduled for Wednesday, is an significant step towards better scalability and better portfolio management. Still, demand for decentralized applications has waned, resulting in lower fees. Currently, there is confined evidence that ETH can outperform the broader cryptocurrency market.

This article is for general information purposes and is not and should not be treated as legal or investment advice. The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.