Ethereum’s price has stabilized around $2,300 following a significant 20% decline over a span of three days, hitting a low of $2,255. This downturn has unsettled market sentiments as such a low has not been recorded since October 2024. However, the derivatives market for Ethereum is beginning to display signs of recovery, suggesting a possible rebound to $2,800.
Recent data shows the 30-day Ethereum futures are trading at a 7% premium over the spot market, indicating reduced bearish pressure. Analysts suggest that while Ethereum’s recovery to $2,800 may take some time, perhaps weeks or months, the current low is expected to be the bottom.
Several macroeconomic factors are affecting Ethereum’s price recovery. The latest US jobless claims have reached 242,000, their highest level in three months, and pending home sales in January hit a record low, painting a picture of broader economic challenges. Additionally, investors are concerned about new import tariffs imposed by the US on goods from China, Canada, and Mexico, escalating trade tensions further as the European Union prepares to respond to the potential tariffs.
Amid these conditions, Nvidia’s shares dipped 3.3% after strong quarterly results, reflecting lingering market uncertainties. Gold prices have also declined, underscoring wider market apprehensions.
In contrast, Ethereum’s options markets demonstrate resilience. The current ETH options skew stands at -2%, well within a neutral range, indicating confidence among investors despite the recent price drop. This mirrors previous situations, like on February 3, when ETH’s price fell sharply but soon recovered, maintaining stability afterward.
Ethereum remains on a potential path to $2,800, especially as Solana, a key competitor, sees a slowdown in its memecoin sector. Ethereum’s dominance in total value locked continues, fuelled by demand for liquid staking, lending, and other liquidity protocols.
The pace of Ethereum’s recovery is closely tied to the implementation of planned network upgrades and incentives for layer-2 solutions, promising enhanced base layer utility and staking rewards. These developments could pave the way for Ethereum’s price recovery in the near future.
