Key Points
- Ethereum’s demand is increasing as put-to-call ratios drop and the price remains stagnant.
- Despite bearish sentiment and decreased network growth, ETF popularity could boost Ethereum’s interest.
Ethereum (ETH) has been hovering around the $3500 price range for a while, but that hasn’t deterred the bullish sentiment surrounding it.
Rising Ethereum Demand
Recently, 200,000 Ethereum options contracts expired, and the data surrounding this event suggested a rise in bullish sentiment in the Ethereum market. The Put-Call Ratio, which is a key indicator of market bias, was at a low 0.36.
This ratio implies that there have been fewer purchases of put options compared to call options, indicating that most options traders expect the price of Ethereum to rise. Adding to this optimism is the maximum pain point of $3,600, where most options contracts become worthless. If Ethereum surpasses this price at expiry, most call options will become profitable, reflecting a bullish bias.
Moreover, low implied volatility (IV) below 60% across all short-term Ethereum options contracts further fuels the bullish outlook. Low IV suggests investors anticipate Ethereum’s price to remain stable or increase in the near term.
Price Movement and Network Growth
Despite the bullish sentiment, the price of Ethereum has been fluctuating. After appreciating significantly post-May 20, the bullish sentiment around Ethereum began to deplete. The altcoin’s price fell again after May 27, reversing its market trend.
The Chaikin Money Flow (CMF) for Ethereum fell significantly during this period, indicating a substantial drop in money flow for Ethereum. The Relative Strength Index (RSI) for Ethereum was also relatively low, suggesting that Ethereum’s bullish momentum was waning.
Furthermore, the network growth for Ethereum fell as the price declined, suggesting that new addresses were losing interest in Ethereum and were not willing to buy the altcoin at a discount. If this trend continues and addresses refuse to buy more Ethereum, it could further impact the price of Ethereum negatively.
During this period, the velocity of Ethereum also plummeted, implying that the frequency of trades had significantly decreased over the last few days. However, if the popularity of ETFs continues to rise, the overall interest in Ethereum could significantly increase as Wall Street money flows in.
