Ethereum could continue bleeding under the effects of the US Securities and Exchange Commission’s (SEC) actions, but in the meantime, network and derivatives data suggest that the altcoin is strong above $1,800.
The news of the SEC suing two of the world’s largest cryptocurrency exchanges Binance and Coinbase saw Ether’s price drop to seek solace from the 100-day Simple Moving Average (SMA) which was sitting at $1,809 on Monday. Bulls are glad that the price of the proof-of-stake (PoS) token did not breach the $1,800 psychological level.
Let us look at Ethereum’s price action, on-chain metrics and other factors that impact investor sentiment and price in the short term.
Increasing TVL in Ethereum’s dApps
The total value locked (TVL) on a network’s decentralized applications (dApps) is a measure of deposits locked on the blockchain. Data from DeFiLlama shows that TVL in Ethereum’s dApps has been on a downtrend since March, reaching a low of 14.35 million ETH on June 3. This metric bounced back on June 6 to reach 14.6 million ETH.
The number of active users interacting with DApps has also been on the rise over the last few days. The DeFiLlama chart below shows that the number of active users on the Ethereum network has increased from 57,000 users on May 2 to almost 400 on June 5, when the SEC-triggered sell-off occurred.
Active Users On Ethereum
This shows that users are still confident in the network and the utility it offers to developers. This, in turn, boosts investor confidence in the price of Ethereum and its potential to rebound.
Ether’s Derivatives Remain Neutral
Data from Laevitas, a quantitative crypto data analytics firm, Ethereum’s futures premium indicator shows that professional traders are avoiding leveraged bullish bets. Note that not even Monday’s drop to $1,800 was able to flip the whales and turn market makers bearish.
Generally, ETH futures contracts in healthy markets should trade at a 4 to 8% annualized premium — a situation known as contango, which is not unique to crypto markets. The current value between 2 and 3% for both OKX and Deribit shows that the markets are neutral, providing hopes of a rebound from the current level.
Ethereum Should Hold Above $1,800 To Avoid Further Losses
The three indicators discussed above — the dApp TVL bounce to 14.6 million ETH, the increase in active users, and neutral Ether derivatives markets, signal the price’s resilience despite the retest of the $1,800 level.
Ethereum network usage data remains healthy, and the recent retest of the 100-day SMA was not enough to scare professional traders, according to derivatives metrics.
Therefore, the bulls should fight to maintain the token above the 100-day SMA which is sitting around the $1,800 psychological level. If they succeed, they may push ETH past the 50-day SMA at $1,856 and above the triangle’s descending trendline targeting a return to $2,000.
Higher than that, the next logical move would be a rise to the April 14 swing high of around $2,140. This would represent a 16.6% climb from the current price.
ETH/USD Daily Chart
On the downside, the technical setup pointed to a constituted downtrend. Ethereum price was trading within the confines of a bearish triangle, forecasting an 18.14% drop to the technical target of the prevailing chart pattern around $1,500 if confirmed.
Also supporting the grim outlook was the down-facing 50-day SMA and the downward movement of the Moving Average Convergence Divergence (MACD) indicator. Note that Ethereum’s downtrend will gain momentum once the MACD crosses the zero line into the negative region.
