According to the Ethereum price indicators, traders will have a difficult time defending the $2K support level

The pivot point for Ethereum bulls is $2,000 as they fight to turn $2,100 into support.

Ether (ETH) has been attempting to form an ascending channel since the May 12 market-wide crash, which sent its price to $1,790. The altcoin’s support is currently at $2,000, but traders are becoming increasingly doubtful as to whether or not the cryptocurrency market will recover.

Ether/USD 4-hour price at Bitstamp. Source: TradingView

The Federal Reserve has been the source of market activity and uncertainty has dominated sentiment because major central banks are attempting to control inflation. Traders are less inclined to wager on Ether decoupling from broader markets at this time, given that the correlation between crypto markets and the S&P 500 index has been over 0.85 since March 29th.

The correlation statistic presently ranges from -1 (meaning selected markets move in opposite directions) to +1 (a perfect and symmetrical movement), with a neutral 0 suggesting no relationship between the two assets.

On May 17, Jerome Powell, the Chairman of the Board of Governors for the Federal Reserve System, stated that he was committed to reducing inflation by raising interest rates until prices start to fall. Nonetheless, Powell warned that the Fed’s rate-hiking campaign might have an impact on unemployment.

From the other side, financial institutions were relieved to learn that the monetary authority intended to conduct a “soft landing,” but that doesn’t negate the undesired results of achieving “price stability.”

A US Congressional Research Service (CRS) paper published on May 16 analyzed the recent TerraUSD (UST) crisis, further boosting Ether’s price. The United States Congress’ legislative arm added that the stablecoin sector is “not adequately regulated.”

The price of Ether has increased by more than 50% in the past week, taking it up to $1,350. In the meantime, TVF on the Ethereum network fell by 12% during that period.

The amount of Ether in circulation has dropped by about 7%. The network’s TVL has decreased from 28.7 billion Ether to 25.3 million today. Terra’s (LUNA) collapse had a damaging influence on the decentralized finance industry, affecting all smart contract blockchains in an event that was felt across the board in the blockchain world. In the end, investors should concentrate on Ethereum’s network durability during this extraordinary time period.

Let’s look at the data from Ether’s futures market to see how professional traders are positioned, including whales and market makers.

The lack of a fluctuating funding rate makes quarterly futures the preferred instruments of whales and arbitrage desks. Because these fixed-month contracts trade at a small premium to spot markets, sellers are willing to accept less money in order to keep settlement delayed.

In healthy markets, long-term contracts should trade at a 5% to 12% annualized premium. This scenario is referred to as “contango” and occurs in all asset markets, not just cryptocurrency ones.

Ether futures 3-month annualized premium. Source: Laevitas

On April 6, the premium on Ether’s futures contracts fell below 5%, falling below the neutral-market line. Furthermore, because current 3.5% basis indicator indicates that there is insufficient leverage demand from buyers, you can see that the absence of leverage demand from sellers is obvious.

On May 12, the price of Ether crashed to $1,700, draining any remaining bullish enthusiasm from the market. Even though Ether’s price shows an ascending channel formation, bulls are still far away from the confidence levels necessary to place leveraged bets.

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