Ethereum price data casts doubt on the strength of ETH’s $3K support

The price of Ether (ETH) fell by 21% between April 9 and April 14, hitting a 50-day low. Despite recovering some of its losses, Ether continues to show signs of weakness following a failed attempt to breach the $3,200 resistance on April 14. Traders are now asking if the $3,000 support will last longer.

Analysts are not optimistic about the chances of approval of the Ether ETF

Investors are cautiously optimistic about the possible approval of a spot ether exchange-traded fund (ETF) in May. But the mixed signals from stocks and derivatives suggest that further corrections are likely before the US Securities and Exchange Commission (SEC) makes its decision.

Jan Van Eck, CEO of VanEck Investments, expressed doubt that the spot Ether ETF would be approved in May. He pointed to the SEC's extended inaction on a pending list of seven applications, including those from large companies such as BlackRock, Fidelity, ARK 21Shares and VanEck.

Eric Balchunas, senior Bloomberg ETF analyst, noted that the lack of “significant feedback” from the regulator, even in face-to-face meetings, would indicate low approval odds, perhaps around 35%. “There's no reason why the SEC didn't do anything for months when we knew this was coming,” added James Seifert, another Bloomberg ETF analyst.

It would be easy to attribute Ether's recent decline to only dim prospects for spot Ether ETF approval, especially as Bitcoin (BTC), the leading cryptocurrency, also fell 14% in the five days to April 13. Compare Ether's performance to its direct competitors, especially those involved in decentralized applications (DApps).

Ether's 15% drop since April 9 was more pronounced than BNB's (BNB) drop of 8% and Tron's (TRX) 10% drop. Conversely, Solana (SOL) experienced a significantly steeper decline. However, these figures do not necessarily reflect the activity levels in each network's DApps. Therefore, it is important to examine trends in Total Value Locked (TVL) in these networks.

According to Defilama, the Ethereum network's TVL hit a more than 13-month high on April 15, reaching 16.4 million ETH, an increase of 14.8% month-on-month. In comparison, BNB Chain's TVL has remained stable at 9.5 million BNB, while Tron deposits have seen a 1% decline in the 30 days to April 15.

DApps activity and ETH derivatives offer mixed prospects for value

The preliminary analysis indicates that the Ethereum network has an advantage over its competitors, but a more detailed investigation is necessary, because not all decentralized applications (DApps) require large deposit bases. It is important to evaluate network activity by examining transaction volumes and the number of active users.

According to Dapradar, the Ethereum blockchain maintained its dominance in 7-day DApp volume of $45.7 billion, which is significantly higher than its main competitor, BNB Chain. Moreover, despite a modest 3% drop in active addresses (UAW) since April 9, used as a proxy for users to connect to DApps, Ethereum's decline was sharper compared to BNB Chain, which fell 7%.

It is important to analyze ETH options to gauge whether professional traders are more pessimistic about Ether's prospects. Generally, a delta skew metric above 7% suggests bearish expectations, while a skew below -7% indicates a bearish outlook.

On April 16, the Ether options skew gauge reached its highest level in more than two months, breaking into bearish territory after hovering at the 7% mark for four days. This trend suggests that whales and market makers are seeking a lower price protection premium on ETH.

Related: Ethereum liquid staking protocol Puffer Finance raises $18M in Series A

On the one hand, the anticipation of a decision on the Ether ETF in place in May will strengthen the price of Ether, and the network's on-chain activity, although stagnant, has outperformed its competitors. However, rising risk aversion among professional traders on April 16 in volatile markets suggests that we should not ignore further price corrections of ETH below $2,900.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.