Traders anticipate that Ethereum's price will be $3,800 but several data indicates otherwise

Is it time to make a correction after ETH rose by 34% in two weeks on the market? According to on-chain measurements and derivatives data, yes.

Investors are hesitant to criticize a price rally unless the chart shows significant downside risks. For example, looking at Ether’s (ETH) current price chart might suggest that the rising channel that began on March 15 is too strong.

Ether price at FTX, in USD. Source: TradingView

Traders are naturally concerned that a breakdown past the $3,340 support might lead to a retest of the $3,100 level or a 12% drop down to $3,000. Of course, this is mostly determined by traders’ positioning as well as the Ethereum network’s on-chain statistics.

For one thing, the Ethereum network’s total value locked (TVL) reached a high of ETH 32.8 million on Jan. 23 and has subsequently decreased by 20%. TVL is a metric that tracks the number of coins deposited on smart contracts, including decentralized finance (DeFi) , gaming, NFT marketplaces, social networks, collect

Furthermore, the average transaction fee on the Ethereum network has recently risen to $15, after dipping to $8 in March. As a result, one must evaluate if this reflects a lessened use of decentralized applications (DApps) or users benefitting from layer-2 scaling solutions.

Traders should look at Ether futures market data to learn how professional traders position themselves. The quarterly contracts are preferred instruments by whales and market makers because they avoid the declining funding rate of the perpetual futures.

The basis indicator compares current spot market prices to longer-term futures contracts. To compensate traders for “locking in” their money for two to three months until the contract expiration, the Ether futures annualized premium should be 5% to 12%.

The current 6% Ether futures basis is just above the neutral market minimum threshold. A yearlyized futures premium below 5% is bearish, while ones greater than 12% are regarded bullish. This information reveals that expert traders are far from thrilled, but there was a 4 percent or lower annual basis rate in the previous few months, which reflected bearish

Externalities that may have influenced derivatives data should be investigated by analyzing the Ethereum network’s on-chain data. For example, observing network usage tells us whether real-world applications demand Ether in sufficient quantities.

On-chain metrics raise concerns

The number of active addresses on the network may be used as a fast and accurate check for efficiency. Of course, the growing use of layer-2 solutions might affect this statistic, but it serves as a good place to start.

The number of daily active addresses has increased by 2% over the past 30 days, but it is nowhere near the 857,520 seen in May 2021. On a primary layer basis, Ether token transactions are not appearing to be increasing.

Traders should continue to DApp usage metrics, but they should avoid concentrating on the TVL since that number is strongly influenced by lending platforms and decentralized exchanges (DEX).

The number of active Ethereum addresses dropped by 11% on average each month. Overall, this is disappointing because the smart contract network was intended to support decentralized applications.

Ether transactions and DApp usage have gone up a lot since April, with the network’s DApps increasing by 13% in that time. Solana (SOL) saw a 6% increase in active users between April and June, whereas Polygon (GNO) only increased by 0.12%. Unless Ether

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