Ethereum price finally topped $3K, but data suggests a reversal is nowhere in sight

There is an aged saying successful accepted markets which is really much similar a trading rule. It goes, “when the inclination is negative, 1 tin lone beryllium neutral oregon short,” meaning stake connected the terms decrease. The occupation is that a alleviation bounce tricks traders into believing that the antagonistic prevailing sentiment has shifted into a buyers’ market.

For example, aft analyzing Ether's (ETH) terms chart, 1 mightiness reason that aft a 41% crash, a bull tally should beryllium ignited sooner alternatively than later. Unfortunately, this is simply a spot of a fallacy due to the fact that markets tin beryllium successful periods of non-definition (trendwise).

Ether terms astatine FTX, successful USD. Source: TradingView

Thus, you could accidental that the supra illustration presents a agelong play of scope trading adjacent $2,800, for example. Considering Ether's 88% annualized volatility, moves betwixt $2,400 and $3,200 should beryllium regarded arsenic normal.

Using method analysis, a trader mightiness constituent to little highs forming the supra downtrend channel, but should Ether bears observe and telephone for $2,500 and lower? That mostly depends connected however retail traders are positioned, on with the Ethereum network's on-chain metrics.

A fewer things to see are whether the 63% driblet successful web transaction fees to the existent $17 reflects a alteration successful the usage of decentralized applications (DApps), oregon are users benefiting from engaging with different layer-2 scaling solutions?

Ether’s futures premium is absent

To recognize however assured traders are astir Ether's terms recovery, 1 should analyse the perpetual contracts futures data. This is the retail traders' preferred derivative due to the fact that exchanges connection up to 50x leverage, and its terms tends to way the regular spot markets perfectly.

In immoderate futures declaration trade, longs (buyers) and shorts (sellers) are matched astatine each times, but their leverage usage tin vary. Consequently, exchanges volition complaint a backing complaint to whichever broadside deposited little margin, and this interest is paid to the opposing side.

Ether perpetual futures 8-hour backing rate. Source: Coinglass

This information tells america whether retail traders are getting excited, causing the backing complaint to determination supra 0.05%, equivalent to 1% per week. Notice however the past mates of months showed a somewhat antagonistic backing rate, reflecting a neutral-to-bearish sentiment. Currently, determination is nary motion that retail traders are assured capable to bargain Ether utilizing leverage.

To exclude externalities that mightiness person influenced derivatives data, 1 should analyse the Ethereum network's on-chain data. For example, monitoring the web usage tells america whether existent usage cases enactment the request for Ether tokens.

On-chain metrics rise concern

Measuring the monetary worth of the Ether transacted connected the web provides a speedy and reliable indicator of effectual use. Of course, this metric could beryllium masqueraded by expanding adoption successful layer-2 solutions, but it works arsenic a starting point.

7-day mean of native ETH token transfers per day, USD. Source: CoinMetrics

The existent $6.7 cardinal regular transaction mean is simply a 6% summation from 30 days before, but it's obscurity adjacent the $9 cardinal seen late-2021. Data shows that Ether token transactions are not showing signs of growth, astatine slightest connected the superior layer.

One should proceed to decentralized applications usage metrics, but debar exclusive absorption connected the Total Value Locked (TVL) due to the fact that that metric is heavy concentrated connected lending platforms and decentralized exchanges (DEX), truthful gauging the fig of progressive addresses provides a broader view.

Ethereum web 30-day DApps activity. Source: DappRadar

On average, Ethereum DApps saw a monthly 10% alteration connected progressive addresses. In a nutshell, the information is disappointing due to the fact that the astute declaration web was specifically designed to big decentralized applications specified arsenic non-fungible token (NFT) marketplaces and decentralized finance, DeFi.

Unless determination is simply a decent maturation successful Ether transactions and DApps usage, bears are apt to person the precocious hand. As for retail traders' neutral backing rate, it should not beryllium considered a bearish motion arsenic those investors typically participate agelong leveraged positions aft a beardown terms rally.

The views and opinions expressed present are solely those of the author and bash not needfully bespeak the views of Cointelegraph. Every concern and trading determination involves risk. You should behaviour your ain probe erstwhile making a decision.