Ether Price Dips to $1,410, Triggers Liquidations, but Derivatives Data Suggests Moderate Resilience

Ether’s Price Drop Triggers Liquidations, But Recovery Ensues

Ether (ETH) price dropped to $1,410 on April 7, marking its lowest level since March 2023. This sharp decline triggered liquidations of leveraged ETH futures worth over $370 million in 2 days, according to CoinGlass data. However, the altcoin managed to recover above the $1,500 mark as the S&P 500 index reclaimed its psychological 5,000 support level.

Over the past 30 days, Ether has underperformed the broader cryptocurrency market by 14%. Despite this, professional traders are not yet ready to turn bearish, as suggested by Ethereum’s derivatives data and onchain metrics. While this data does not guarantee that Ether’s price has reached its bottom, the reduced demand for bearish positions below $1,600 offers some reassurance for bullish investors.

Ethereum’s Derivatives Data Suggests Moderate Resilience

On April 7, the Ether monthly futures premium rose to 4% after dipping to 3% earlier in the day. Although still below the neutral threshold of 5%, this marks an improvement from March 31, when the indicator hit a low of 2%. Currently, there is a noticeable lack of demand from long positions (buyers), but this is not unusual following a steep 30% drop in ETH’s price over the past month.

Ethereum is a Victim of Worsening Macroeconomic Conditions

Investors remain concerned that escalating global trade tensions could lead to an economic recession and reduce interest in risk-on assets. This scenario also weakens the potential positive impact of a possible interest rate cut during the US Federal Reserve’s (Fed) next meeting on May 6-7. Typically, such a move would benefit the cryptocurrency market by lowering returns on fixed-income investments.

Despite US President Donald Trump’s strong push for interest rate cuts, as expressed in his Truth Social post on April 7, Fed Chair Jerome Powell remains cautious about inflation trends. Powell reportedly stated on April 4: “It is too soon to say what will be the appropriate path for monetary policy,” according to Yahoo Finance.

Adding further pressure to Ether’s price was Ethereum developers’ decision to delay the Pectra upgrade, originally scheduled for April. Developers have now set May 7 as the target date for its mainnet launch but provided no specific reason for the delay. This comes even though the Hoodi testnet upgrade was successfully implemented on March 26.

Ethereum TVL Jumps to an All-Time High

Given the negative news flow, one might have expected Ether bears to dominate the market entirely. However, derivatives data suggests that bears are not as confident as anticipated. When traders foresee a correction, put (sell) options tend to trade at a premium, pushing the 25% delta skew metric above 6%. Conversely, during bullish periods, this indicator typically falls below -6%.

Currently, the ETH options skew stands at 10%, the same level as March 31, which remains within bearish territory. However, this reading is significantly less extreme compared to May 2024, when it peaked at 20% amid a sharp ETH price drop from $3,700 to $2,860 within five weeks. In essence, while Ether derivatives markets signal bearish sentiment, they do not reflect panic levels.

Conclusion

While Ether’s price has dropped to a 6-month low, the altcoin’s derivatives data and onchain metrics suggest moderate resilience. The reduced demand for bearish positions below $1,600 offers some reassurance for bullish investors, but macroeconomic conditions remain the primary driver of cryptocurrency demand. As the US Federal Reserve’s next meeting approaches, investors will closely monitor interest rate cut expectations and their impact on the cryptocurrency market.

FAQs

Q: What triggered the Ether price drop to $1,410?
A: The sharp decline was triggered by liquidations of leveraged ETH futures worth over $370 million in 2 days, according to CoinGlass data.

Q: How did the Ether derivatives market respond to the price drop?
A: The Ether monthly futures premium rose to 4% after dipping to 3% earlier in the day, indicating moderate resilience in the derivatives market.

Q: What is the current demand for bearish positions in the Ether derivatives market?
A: The current demand for bearish positions is relatively low, with the ETH options skew standing at 10%, indicating a lack of panic selling.

Q: What is the outlook for Ether’s price in the coming weeks?
A: The outlook remains uncertain, with macroeconomic conditions and interest rate cut expectations playing a significant role in determining the cryptocurrency market’s direction.