Despite the failure to break the descending channel resistance at $2,000 on May 31, Ether’s (ETH) market structure remains bearish. Despite the fact that it may not seem like it at first glance, this three-week-long price formation suggests that a retest of $1,700 is underway.
Ether/USD 4-hour price at Bitstamp. Source: TradingView
On the non-crypto side, a number of equities-related factors are feeding negative sentiments in the crypto market. Microsoft (MSFT) this week lowered its profit and revenue expectations due to tough macroeconomic circumstances. The Federal Reserve’s “Beige Book” revealed that economic activity may have slowed in certain areas of the country, with the Fed preparing to reduce its $9 trillion asset portfolio to combat persistent inflation.
On the up side, according to a study published by The Economist, 85 percent of institutional investors believe open-source cryptocurrencies such as Bitcoin (BTC) or Ether (ETH) are useful diversifiers in portfolio and treasury accounts.
Investors are still risk-averse, which implies that demand for cryptocurrencies may be muted.
The total value locked on the Ethereum network, which measures the amount of money that has been deposited to it, has decreased by 5.5% since Ether’s fall began three weeks ago.
The number of TVL tokens in circulation has dropped by roughly 90% since its peak at over 28.7 billion Ether on May 10 to 27.1 million today, as a result of the Ethereum network’s collapse. On May 10, the USD Terra (UST) — now known as TerraUSD Classic (USTC) — stablecoin collapsed, harming decentralized finance deposits. All things considered, the indicator indicates a small decrease, which is somewhat logical following such an unprecedented event.
Let’s look at Ether’s futures market data to understand how professional traders are positioned. Quarterly futures are favoured instruments by whales and arbitrage desks since they have a constant funding rate.
Fixed-month contracts frequently trade at a 5% to 12% premium above spot markets, suggesting that sellers demand more money to delay settlement for an extended period. This is also typical in conventional assets such as stocks and commodities.
Ether futures 3-month annualized premium. Source: Laevitas
Over the past month, Ether’s futures contracts premiums have hovered around 3%, which is well below the 5% neutral-market threshold. Despite Ether’s 24% negative return in three weeks, the current 2.5 percent basis indicator remains depressed, suggesting that demand from purchasers was limited.
Ether’s plunge to $1,700 on May 27 wiped out any remaining bullish sentiment and, more significantly, resulted in the liquidation of $235 million worth of leverage long futures contracts. Despite Ether’s attempts to surpass the $2,000 resistance on May 31, TVL metrics show no indication of strength from derivatives or DeFi deposits. There is little cause for optimism regarding a sustainable Ether price decoupling to the upside as investors’ attention remains focused on conventional markets and the effects of global macroeconomic instability.
Designed specifically for cryptocurrency investors in Australia, Crypto Tax Calculator Australia is a three-tiered tax calculator application that makes it easy to determine the taxes you need to pay on your digital currency transactions. The free trial tier allows you to get a feel for the app and its features before committing to a paid plan. The basic and advanced tiers offer increasingly sophisticated tax calculation capabilities, with the latter including support for multiple wallets, exchange API integration and more. No matter which tier you choose, Crypto Tax Calculator Australia is an easy and convenient way to calculate your cryptocurrency taxes.