Ether (ETH) price retested at $1780 after news that the US Securities and Exchange Commission sued cryptocurrency exchanges Binance and Coinbase, but it is not absurd to suggest that Ether bulls should be more than happy that its price has not dipped below the 67-day support.
The SEC’s actions are actually a double-edged sword for Ethereum and on crypto Twitter, some analysts attributed the rebound in Ether as a result of it not being listed as a security in any of the cases filed against Binance and Coinbase. For example, the SEC explicitly mentioned BNB, Solana (SOL), and Cardano (ADA), which are direct competitors to Ethereum’s smart contract processing capabilities.
However, as analyst Jevgenijs Kazanins pointed out, Ether’s omission does not mean it has the green light from the SEC.
SEC did not mention #ETH on the list of tokens it considers securities when suing Coinbase and Binance. Could it be that the SEC is working on a separate lawsuit targeting the Ethereum Foundation?
— Yevgeny Kazanin (@yevgeny) June 6, 2023
Kazanins raises the question of whether the SEC might be targeting the Ethereum Foundation in a separate lawsuit. For now, the idea is mere unfounded speculation, but it certainly has merit given that SEC Chairman Gary Gensler refused to answer questions about the state of Ethereum before the US House Committee on Financial Services. USA in April 2023.
In the meantime, what we can focus on is Ether price action, network data, and other data that affects investor sentiment and the price in the short term.
Ethereum Dapps Get a Slight Boost
TVL measures locked deposits on Ethereum decentralized applications, which have been on a downward trend since mid-March. The indicator reached a bottom of 14.35 million ETH on June 3, but recovered to 14.6 million ETH on June 6, according to DefiLlama.
The number of active addresses interacting with decentralized applications (DApps) is also falling. Over the past 30 days, the top 12 DApps running on the Ethereum network saw a 4% increase in active addresses, despite the average gas fee per transaction staying above $6.5.
If investors fear that Ether is more likely to break below the $1,800 support, it should be reflected in the ETH futures contract premium and rising hedge put option costs.
Ether derivatives metrics even as regulations increased
Ether quarterly futures are popular with whales and arbitrage desks. However, these fixed-month contracts are generally trading at a slight premium in the spot markets, indicating that sellers are asking for more money to delay settlement.
As a result, ETH futures contracts in healthy markets should trade at a 4-8% annualized premium, a situation known as contango, which is not unique to crypto markets.
According to the futures premium, known as the basis indicator, professional traders have been avoiding leveraged long positions (bullish bets). Still, not even the retest of the $1,780 level on June 6 was enough to turn those whales and market makers into bearish sentiment.
To exclude externalities that might have affected only Ether futures, the ETH options markets should be analyzed. The 25% delta bias indicator compares similar call and put options and will turn positive when fear prevails because the protective put premium is higher than call options.
The bias indicator will move above 8% if traders fear an Ether price drop. On the other hand, general enthusiasm reflects a negative bias of 8%. As shown above, the 25% delta bias moved above the 8% positive threshold on June 5, indicating a downtrend. However, the subsequent bounce to $1,880 on June 6 brought the metric back to a neutral state.
Related: Coinbase Reminds World It Tried To “Emprove Regulation” As SEC Sues Over Violations
Ether price looks set to hold above $1,800
In summary, these three indicators point to resilience, namely TVL rebound to 14.6M ETH, 4% increase in active Dapp addresses, and little impact on Ether derivatives markets despite the retest of the $1800 level.
Ethereum network usage data remains healthy and the recent retest of the 67-day support was not enough to scare off professional traders, according to derivatives metrics.
Consequently, the bulls appear to have dodged a bullet, greatly reducing the risk of an imminent price crash.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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