Important takeouts:
ETH failed to regain $2,600 as futures and options data shows weak beliefs from traders.
Ethereum’s Layer 2 growth has not led to increased demand for ETH due to lower roll-up trading fees.
The Solana ETF undermined ETH’s Altcoin leadership, reducing the chances of rallying above $3,200.
Ether (ETH) rose 9% between Tuesday and Thursday, but failed to exceed $2,600. As prices rose, traders were able to push ETH to $3,200, pointing to bullish technology formation known as “golden crosses.” This was the last time I reached it in January. However, the derived data suggests that ETH traders do not feel bullish.
X-user Merlijntrader noted that Wednesday’s golden cross formation “supports bull markets,” and technical analysis points to a stronger short-term momentum compared to the long-term average. For Merlijntrader, ETH is “sending a clear signal,” suggesting that the next bull run might be approaching.
ETH derivatives show low confidence amid increasing competition
Despite ETH jumping to $2,600 on Thursday, demand for long positions that were utilised had not increased significantly. In neutral markets, monthly contracts usually trade at an annual premium of 5% to 10% above the spot price to reflect the extended settlement period.
Currently, Ether Futures Premium is below the 5% neutral threshold, even after recent price increases. The indicator last showed a bullish stance on January 26th, when ETH traded nearly $3,300. In particular, that date coincided with the launch of Solana’s official Trump (Trump) Memo Coin, boosting blockchain volume and revenue.
X-user Cryptunez observed that Solana’s distributed application (DAPPS) generated $1.3 billion more revenue than Ethereum’s.
However, this narrow analysis overlooks the strategic shift towards layer 2 scaling in Ethereum. Much of the ecosystem’s DAPP revenues are currently flowing to bases, arbitrum, polygons, optimism, and unicane. Furthermore, Solana faces criticism of the largest extractable value (MEV) practice, allowing verifiers to sort transactions for profit.
X-user R89CAPITAL has properly captured investor sentiment by pointing out that Ethereum supporters are “right about companies” and that they are “wrong about being bullish for ETH.” Essentially, rollups receive very low fees for data processing and encourage adoption, but do not create any meaningful demand for ETH itself.
Coinbase protocol specialist Viktor Bunin noted that interoperability within Ethereum’s Layer-2 ecosystem remains a major obstacle. Without the incentive for “large players to work together,” teams have now pursued isolated solutions. Bunin believes meaningful progress requires more direct involvement from the Ethereum Foundation.
To measure whether professional traders have lost confidence in ETH price increases, it is useful to look into the ETH option Delta Skew. In bearish conditions, the Put (sell) option tends to trade at a premium over comparable call (buy) options, pushing indicators above the 6% neutral threshold.
Currently, ETH options are sitting at 1%, suggesting that traders could have equal price movements in either direction.
Related: ETH News Update: If we expand the expansion of the Corporate Ether Ministry of Finance, will the price be 2.8k?
The lack of confidence in ether derivatives reinforces the notion that traders are barely certain of ETH’s ability to regain the $3,200 level. Part of that attention could be attributed to the launch of its first Spot Solana Exchange Trade Fund (ETF) in the US on Wednesday.
Solana ETF not only shattered ETH leadership among Altcoins, but also incorporated embedded staking to raise the bar. Unless Ethereum can provide ETH owners with the direct benefits of tokenization and institutional adoption, a short-term sustainable assembly appears unlikely.
