Ethereum's recent price increase of 56% does not inspire optimism among traders due to several factors, including low network activity and competition from other blockchains.
Ethereum Derivatives Market
Ether (ETH) price has surged by 56.5% over the past 30 days. However, ETH derivatives metrics suggest that traders remain cautious. This sentiment may stem from concerns that Ether has consistently failed to break the psychological barrier of $4,000 since March 2024. The drop in perpetual contracts funding from 19% to 9% indicates decreased demand for bullish positions.
Declining TVL and Competition
Part of the traders' disappointment stems from an 11% decrease in network deposits. The total value locked (TVL) in the Ethereum ecosystem fell to a five-month low of 23.4 million ETH. In comparison, TVL on Solana decreased by only 4%, while BNB Chain saw a 15% increase. Ethereum has also lost its top position in decentralized exchange (DEX) volume, recording $81.4 billion compared to $82.9 billion handled by Solana.
Future of Ethereum and Corporate Reserves
Despite the recent surge, traders remain skeptical about ETH reaching the $4,000 mark. Competitors like Solana and BNB Chain offer more user-friendly options. Additionally, there are concerns regarding the rise of Ether reserves held by corporations, with nine publicly listed companies accumulating at least 2,000 ETH each, including Bitmine Immersion Tech and SharpLink Gaming.
Thus, while ETH's price increase is significant, the market remains cautious due to competitive factors and declining activity. The future of Ethereum will largely depend on trader interest and corporate holdings.
