The price of Ether has been struggling to maintain its $1,850 support since April 21, the same level it held before the rally towards $2,100 that began on April 13. Investors are now questioning whether there are buyers for this digital asset, especially after the 13.5% price correction within six days and the liquidation of $548 million in leveraged futures longs between April 19 and April 21.
One of the factors that may be hampering the Ether price is the stricter regulatory environment that centralized exchanges are facing. For instance, Dubai-based Bybit recently announced that all users must complete Know Your Customer (KYC) identity verification by May 8 for order execution and withdrawals. Non-KYC users have a monthly withdrawal limit of 100,000 Tether (USDT) until May 8. Additionally, United States-based crypto exchange Gemini announced on April 21 the upcoming launch of a derivatives platform outside the country, as the uncertain regulatory environment forced the company to seek alternative locales. However, only clients from selected regions can access this new service, with the US, Canada, and most European countries excluded, except Switzerland.
Furthermore, the Ethereum network is experiencing its own set of problems. Total deposits on Ethereum’s smart contracts in Ether (ETH) terms dropped to their lowest levels since August 2020. According to DefiLlama data, Ethereum DApps’ total value locked (TVL) in Ether terms decreased to 15.3 million ETH on April 24, compared to 22.0 million ETH six months prior, marking a 30% decline. As a comparison, TVL on BNB Smart Chain in BNB (BNB) terms fell by 20%, and the Polygon network’s MATIC (MATIC) deposits decreased by 11%. Ethereum’s market share by volume on decentralized exchanges (DEXs) also decreased, reaching its lowest level in more than 12 months at 54%, down from 64% in December 2022. In contrast, the Tron network was the biggest winner in stablecoins, thanks to its low transaction fees.
To understand whether professional traders are pricing higher odds of an ETH price decline, one can analyze the options market. A 0.70 put-to-call ratio indicates that put option open interest lags the more bullish calls and is, therefore, bullish. In contrast, a 1.40 indicator favors put options, which can be deemed bearish. The put-to-call ratio for Ether options volume reached its lowest level in over three months, indicating excess demand for neutral-to-bearish puts. Currently, the protective put options outnumber the neutral-to-bullish call options by more than four times.
Given the uncertain regulatory environment in the US and the impact of competing networks, it is unlikely that the Ether price will sustain the $1,850 support level. Derivatives traders clearly reflect the higher probability of negative price movements. However, it is important to remember that all investment and trading moves carry risks, and readers should conduct their research before making any decisions.
