3 Key Metrics Suggest Ether Price Volatility Ahead

Ether’s performance in the market has faced some challenges recently. On September 11, the altcoin’s price dipped to the $1,530 support level, prompting concerns among investors. However, Ether managed to recover and surge by 6%, potentially indicating a turning point after a month of losses. To determine whether Ether can climb back to $1,850, we need to examine key metrics related to ETH derivatives and network activity.

Regulatory Uncertainty and High Network Fees

One of the major obstacles Ether faces is regulatory uncertainty. Binance, one of the major cryptocurrency exchanges, is facing legal battles with the U.S. Department of Justice and the U.S. Securities and Exchange Commission. These battles have resulted in layoffs and the departure of top executives. Additionally, the Ethereum network is experiencing a decline in smart contract activity, which is an essential aspect of its original purpose.

Furthermore, the Ethereum network continues to struggle with high transaction fees, with average fees exceeding $3. These hurdles, along with the regulatory challenges, have limited investors’ appetite for Ether.

Declining DApp Activity and Centralization Concerns

In the past 30 days, the top Ethereum decentralized applications (DApps) have witnessed a significant decrease in the number of active addresses. However, the Lido liquid staking project has seen a 7% increase in total value locked (TVL) in ETH terms during the same period. Despite its success, Lido has faced criticism due to its dominance, accounting for 72% of all staked ETH. Vitalik Buterin, Ethereum co-founder, has acknowledged the need for Ethereum to become more accessible for everyday users to maintain decentralization in the long term.

ETH Futures and Options Market Sentiment

An analysis of derivatives metrics provides insights into how professional traders are positioned in the market. Currently, Ether monthly futures are trading at a lower premium, indicating reduced demand for leveraged long positions. Additionally, the options market reveals that traders are leaning bearish, with the 25% delta skew suggesting a potential drop in Ether’s price.

Despite potential catalysts such as requests for a spot ETH exchange-traded fund (ETF) and macroeconomic factors driven by inflationary pressure, the combination of declining DApp activity, regulatory uncertainties, and reduced interest in leveraged long positions might exert downward pressure on Ether’s price. As a result, a rally to $1,850 in the short to medium term appears unlikely.

Please note that this article is for general information purposes only and should not be considered legal or investment advice. The views and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Cointelegraph.

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