Ethereum under pressure: drop in price and liquidations shake the market

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Ethereum price drop and market analyzes: an overview

The Ethereum Prize (ETH) experienced a significant decline of 9.3 % between March 26 and 28, 2023 and has fallen to $ 1,860. This decline marked the first test of this price level for two weeks and led to over $ 114 million of liquidations for leverage ETH futures. As a result, the futures premium has been sank to the lowest level in over a year compared to the regular spot market. Many dealers interpret the currently extremely low ETH futures premium as a potential signal for a price floor.

market situation and futures bonus

As a rule, the monthly futures of Ethereum act above the Spot Prize, since sellers require compensation for the longer settlement period. Usually an annualized premium of 5 % to 10 % indicates neutral markets. On March 8, however, the ETH Futures premium fell under this threshold after the price had fallen 24 % in the previous two weeks. The current annualized premium of only 2 % reflects a low demand for lifted purchases that are strongly influenced by the current price movements.

changes in options and concerns from the market participants

To find out whether large investors (Whales) have lost interest in Ethereum, it is important to analyze the ratio of put options (sale) to call options (purchase). An increase in the 25 % Delta SKEW characteristics of over 6 % indicates that retailers expect a price decline. The current Delta Skew is 7 %, which indicates a lack of trust among professional dealers and increases the likelihood of further sales pressure.

Analysts lead the severe decline in activities in the Ethereum network as one of the main reasons for the reduced attractiveness of ETH. The switch to Layer 2 solutions has significantly reduced the fee potential of the basic network. Since capital inflows are necessary to compensate network validators, the lack of tributaries has led to an increased ETH output, which negatively affects the net endows from native staking.

competition and future developments

The competition for Ethereum has increased significantly since the introduction of alternative blockchains such as BNB Chain and Solana. Networks that aim at specific challenges could significantly influence the cryptoma market. An example is Ethena, a protocol for synthetic dollars on Ethereum, which plans to switch to its own Layer 1 blockchain and recently collected $ 100 million.

Although the sales pressure is currently high and the market mood is perceived as a bearish, an upcoming great protocol update could provide positive impulses. Investors should carefully pursue the potential advantages of the Ethereum update "PECTRA", especially with regard to the basic fees and general user-friendliness.

Overall, the chances that ETH will outperform the wider Altcoin market until this update is carried out.