Spot Ethereum ETFs are emerging, but ETH derivatives markets are flat.
Ether (ETH) price rose 12.5% between July 12 and July 15, but strong resistance at $3,500 halted the momentum. The correction to $3,400 on July 18 came despite the United States Securities and Exchange Commission (SEC) approving two additional positions in Ethereum exchange-traded funds (ETFs). Despite this positive development, the ether derivatives market showed little excitement.
Analysts predict a price of 5,000 ETH, but is it true?
On July 23, the SEC reportedly granted initial approval to at least three issuers to begin trading Ether ETFs. A total of eight positions are held by Ether ETFs pending final regulatory approval of the fund's S-1 filing amendments. Bitwise Chief Investment Officer Matt Hogan expects the price of Ether to reach $5,000 by the end of 2024, given the low relative inflation, the absence of high costs for validators, and the 28% supply locked up statistically.
In the year After gaining 43% of the total crypto market capitalization year-to-date by 2024, it's puzzling why Ether investors aren't bullish, despite the spot ETH ETF. In addition, according to Dapradar data, volumes on Ethereum decentralized applications (DApps) rose 7% to $221 billion in the last 30 days. In comparison, competitor BNB Chain saw a 25% decline in activity, while Solana saw a 16% decline.
In terms of DApps deposits, the Ethereum network remains the leader with a total value locked (TVL) of 17.5 million ETH, equivalent to $59.8 billion, according to Defillama data. This metric has remained flat since last month, with competitors Solana and BNB Chain each at around $4.8 billion. Additionally, according to L2Beat data, Ethereum's Layer 2 ecosystem activity has increased, with total native TVL growing 8.5% over the past 30 days to $14 billion. Therefore, Ethereum on-chain data does not show any weakness.
From a macroeconomic perspective, the latest U.S. producer price index was up 2.6 percent from a year earlier, slightly above the market consensus of 2.3 percent. This suggests that the US Federal Reserve (Fed) still has work to do to curb inflation, meaning that price pressures will continue to hurt demand for some time. Moreover, China's 4.7 percent GDP growth will cause problems for global stock markets.
Additionally, the US Labor Department reported that 243,000 initial jobless claims were filed in the week ended July 13, the highest level since August 2023. Signs of a cooling labor market increase the likelihood of the US Fed cutting interest rates in the next couple of weeks. As reported by Yahoo Finance, Goldman Sachs Chief Economist Jan Hatsius months.
There is no sign of investors pulling out of risk markets, as the S&P 500 index is 2% below its all-time high since July 16. Meanwhile, Ether's price needs to gain 43% to surpass $4,868 set in November. 2021.
The future of Ether does not predict the inevitable price pump
Ether's future premium should be analyzed to assess whether crypto traders are gaining confidence. In regular markets, these contracts must trade 5% to 10% higher than regular markets to account for their extended settlement period.
Related: Bitcoin ETF 4-8X More BTC Price Impact Than Miners – Research
The annual premium or base rate for Ether's fixed-month contracts currently stands at 11%, indicating modest optimism. However, this indicator has not maintained levels above 12 percent for the past month, partly due to possible inflows from the upcoming US ETF launch. For comparison, Bitcoin's starting rate also stands at 11%, indicating that there is no excessive bullishness among Ethereum investors.
Ether bulls may argue that the current lack of confidence provides a surprising position for strong position ETFs if net income expectations are confirmed. Still, with Ether's price failing to rally despite a major rally in risk assets, ETH derivatives metrics indicate a lack of investor appetite, prompting a bull run above $4,000.
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.
