On-chain metrics and fundamental developments have been a beacon of hope for most Ethereum holders in 2021. Whenever prices have suffered a decline, speculators have leaned towards its consistent functionality, and rightly so.
Ethereum has been at the forefront of a lot of crypto-innovations over the years, taking the space to new levels and deserved recognition. And yet, it is important to understand and compare whether these on-chain developments help the price recover or not.
Ethereum on-chain – Setting up the base?
It is disingenuous to completely disregard the on-chain characteristics of Ethereum. In one of our recent articles, we illustrated how some of the factors are currently undergoing a re-test, a development that might be suggesting that the bottom is in.
Source: Santiment
Right now, one of the major headaches associated with network fees is also being played down. ETH’s network currently has the lowest transaction fees since January 2021, something that may propel more users to regularly utilize the network again. While low fees are a good sign, it is also an indication of Polygon and Binance Smart Chain eating up a proportion of ETH’s activity.
However, users have continued to store value on the ETH network, so the importance of the world’s largest altcoin network is not fading away anytime soon.
Source: etherscan.io
Additionally, Ether’s network utilization has also remained high and price corrections haven’t altered its course. Hence, in the long-term ETH’s value should be safe and healthy, right? Technically, yes.
And yet, crypto-investors are often fickle individuals, so the short-term price action is also pretty significant to their growth. This is where derivatives traders come into the picture.
Speaking of the Needle-Moving Factor
Most traders trade in-and-out of crypto, and their impact on the market is also evident. So when the market undergoes a significant bearish liquidation period, their importance might come into the picture from a recovery perspective as well.
That hasn’t been the case for Ethereum of late.
Source: Skew
According to Skew, ETH’s Realized Volatility has taken precedence over Implied Volatility, indicating a cool-down period. From a short-term bullish perspective, that might not be good news. Volatility collectively pushed the market down and its recovery is dependent on a little bit of unpredictability as well.
However, current Options traders are worried and are trigger-shy.
Source: Skew
A majority of the Options Volume is also set towards puts-contracts, but the price expectancy is very range-bound. A major inference that should be drawn from here is the fact that these traders are highly influential when it comes to short-term price movements.
Is June going to be a no-show?
It is like taking a shot in the dark at the moment. There is no certainty with the market as choppy conditions continue to extend themselves. Presently, Ethereum climbing to its previous ATH levels has a probability of less than 5% in June. So, a volatile push is definitely required because on-chain improvements do not pull the trigger.
