Ethereum price data shows strong resistance at $3.5K

Ether (ETH) experienced a significant decline of 14.8% between April 13 and April 14 and has since been trading below $3,300. Every time the price of ETH tests the $3,000 level, buyers intervene, strengthening the support. However, some traders are concerned that ETH will not be able to regain $3,500 without a strong narrative.

Analyst DeFiSurfer808 attributes Ether's price weakness compared to Bitcoin (BTC) to a lack of fresh fundamentals, as Ethereum's native token lacks “some new narrative and flows.”

Ethereum faces constant regulatory uncertainty

Over the past two months, ether has underperformed bitcoin by 16 percent, a trend that continued on April 9 when Jan Van Eck, chief executive officer of investment firm VanEck, mentioned that an American spot Ether ETF request could be rejected in May. Van Eck's comments follow a period of inaction by the US SEC regarding seven pending applications for spot ether ETFs, as reported by Cointelegraph.

Although Ether is classified as a non-secured asset, disagreements between regulators and exchanges dampen investor interest in the broader Ethereum ecosystem, layer-2 solutions, decentralized finance (DeFi) and virtual token (NFT) marketplaces.

On April 11, Uniswap Labs announced it was “ready to fight back” after receiving an enforcement notice from the US Securities and Exchange Commission (SEC). While UniSwap Labs did not disclose the exact details of Wells' announcement, UNI confirmed in a blog post that it was not a security, and emphasized that the platform does not meet US regulatory requirements for securities exchanges or brokerages.

Meanwhile, the regulatory landscape appears to be changing. Michael Welsh and Joseph Watkins, who led the SEC's attorneys in the lawsuit against crypto platform DEBT Box, resigned on April 22 after a Bloomberg report confirmed findings of “gross abuse” in the case. In March, federal judge Robert J.

Additionally, the Blockchain Association and the Texas Crypto Freedom Alliance filed a lawsuit against the SEC in the Northern District of Texas. They oppose the regulator's broad interpretation of the term “dealer” in the Securities Exchange Act of 1934, saying this expansion creates an unclear and burdensome regulatory landscape for digital asset businesses.

Related: Ripple Contests $2B SEC Fine, Says Fine Shouldn't Exceed $10M

Ether chain and derivatives data tell a different story

On April 23, the price of Ether increased above $3,200, which was supported by the increase in demand for Ethereum decentralized applications (DApps). According to Defillama, the network's smart contract deposits since July 2022, measured in Total Value Locked (TVL), peaked at 30.2 million ETH on April 22, an 8% increase from the previous month.

Highlights of Ethereum's TVL growth include innovative platforms such as EigenLayer staking solution, decentralized exchange Uniswap, automated product provider Pendle and Renzo. In contrast, the TVL of the Tron blockchain has fallen by 5% in terms of TRX (TRX) over the past 30 days, while the largest DeFi app, JustLend, has seen an 11% drop in deposits.

The 25% delta skew of ETH options should be used as a proxy to understand if professional traders have doubled down after the underperformance of Ether price. A move above 7% indicates a skewed metric to bearish expectations, while a negative move of 7% usually indicates bearish sentiment.

The Ether options skew gauge showed an increase between April 9 and April 18, suggesting that traders are reducing their exposure to risk. However, this trend reversed on April 19 when ETH traded below $3,000. Current data shows balanced volatility between call (buy) and put (sell) options, indicating neutral market sentiment.

On-chain metrics for Ethereum and ETH derivatives are showing resistance, although Ether's price has recently struggled to hold the $3,000 support level. However, it seems premature to anticipate a bull run above $3,500 given the enthusiasm of investors who have been bullish on the approval of the US spot Ethereum ETF.

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.