Ether (ETH) Price Partially Recovers After 18% Drop, Investors Regain Confidence
- WBOYOriginal
- 2024-07-18 00:04:31978browse
Even if the launch of the spot Ethereum exchange-traded fund (ETF) in the United States takes longer than expected, strong fundamentals suggest a likely price rebound soon.
The price of Ether (ETH) briefly dropped below the crucial support level of $3,000 during the week of July 1–8. The second-largest cryptocurrency experienced an 18% decline, falling from a high of $3,099 on July 1 to a low of $2,826 on July 8.
The price of ETH has since partially recovered, trading at $3,100 at the time of writing on July 11. However, this price is still lower than the previous support level of $3,400, which was breached during the price drop.
The decrease in the price of ETH coincided with a broader downturn in the cryptocurrency market, as evidenced by the 7% price drop in Bitcoin (BTC) during the same period. The total cryptocurrency market capitalization also decreased by 6% during this time.
Several factors may have contributed to the price decline of ETH. One factor could be the delay in the launch of the spot Ethereum exchange-traded fund (ETF) in the United States. Despite strong fundamentals suggesting a likely price rebound soon, the launch continues to be pushed back.
Gary Gensler, Chair of the US Securities and Exchange Commission, recently stated that approvals for S-1 filings are expected "sometime in the summer," which means before the end of September. However, the exact timeline remains uncertain, leaving traders with a reason to maintain a level of skepticism.
Another factor that could have influenced the price decrease of ETH is the large amount of leverage in the cryptocurrency market. Data from Coinglass shows that $313 million in leveraged long positions were liquidated during the price drop of ETH.
Despite the price decrease and the high level of leverage, Ether traders are gradually regaining their confidence, as indicated by onchain and derivatives metrics.
Onchain data shows that the supply of ETH on fiat exchanges continues to decline, which could indicate that investors are less likely to sell in the short term. Glassnode data shows that deposits on exchanges dropped to 12.21 million ETH from 13.34 million ETH two months earlier.
Meanwhile, the total value locked (TVL) in the Ethereum network, which measures the total deposits in its DApp ecosystem, including layer-2 bridges, is steady at 17.7 million ETH, unchanged from a month ago.
On the other hand, data from Deribit shows that the demand for call (buy) options was twice that of put (sell) options, indicating a lack of increase in volumes for neutral-to-bearish strategies using ETH options. Data shows that the ETH Deribit Call Put Ratio dropped to 0.8 on July 8, indicating a lower volume of put options.
However, this indicator quickly reverted to its 7-day average near 0.55, favoring call options volumes by 85%. Both derivatives and onchain metrics support the bullish momentum.
The reduction in ETH available for trading on fiat exchanges also supports a potential short-term price rise above the $3,400 resistance.
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