The United States Securities and Exchange Commission (SEC) has sued cryptocurrency exchanges Binance and Coinbase, leading to a retest of Ether’s price at $1,780. However, Ether bulls should be relieved that the cryptocurrency did not break below the 67-day support. The SEC’s move is a double-edged sword for Ethereum (ETH), as indicated by analysts on Crypto Twitter. Although Ether was not mentioned in the lawsuits against Binance and Coinbase, the possibility of the SEC targeting the Ethereum Foundation in a separate lawsuit cannot be ruled out.
Ethereum Price Action and Network Data
For now, traders can focus on Ether’s price action, network data, and other factors that influence investor sentiment and price in the short term. Total value locked (TVL) measures the deposits held in Ethereum’s decentralized applications (DApps). TVL has been in a downtrend since mid-March but bounced back from a 14.35 million ETH bottom on June 3 to 14.6 million ETH by June 6, according to DefiLlama. The number of active addresses interacting with DApps is also in a slump, with a 4% increase in the top 12 DApps running on the Ethereum network in the last 30 days, even though the average transaction gas fee remained above $6.50.
Ethereum Futures and Options Markets
If investors fear that Ether is likely to break below the $1,800 support, it should reflect in the ETH futures contract premium and increased costs for protective put options. Ether quarterly futures are popular among whales and arbitrage desks and typically trade at a slight premium to spot markets. According to the futures premium, known as the basis indicator, professional traders have been avoiding leveraged longs. However, not even the retest of the $1,780 level on June 6 was enough to flip those whales and market makers into bearish sentiment.
To exclude externalities that might have solely impacted the Ether futures, one should analyze the ETH options markets. The 25% delta skew indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put option premium is higher than the call options. The skew indicator will move above 8% if traders fear an Ether price crash. As displayed above, the 25% delta skew moved above the positive 8% threshold on June 5, indicating bearishness. However, the subsequent bounce to $1,880 on June 6 has moved the metric back to a neutral state.
These indicators signal resilience in the Ethereum network usage data, and the recent retest of the 67-day support was not enough to scare professional traders, according to derivatives metrics. As a result, bulls seem to have dodged a bullet, greatly reducing the risk of an imminent price crash. Although analysts cannot rule out the SEC targeting the Ethereum Foundation in a separate lawsuit, traders can focus on Ether’s price action, network data, and other factors that influence investor sentiment and price in the short term.