Recent Data Suggests Ethereum Could Make A Monthly Correction Towards Major Support But Many Traders Say It's Unlikely

Ethereum (ETH) price has shown weakness after failing to break above the $1,950 resistance on April 26. The subsequent correction took Etherum to $1,810 on May 1, nearing its lowest level in four weeks. Interestingly, the move occurred while First Republic Bank (FRB) was shut down by the California Department of Financial Protection and Innovation.

Interestingly, the move came while First Republic Bank (FRB) was closed by the California Department of Financial Protection and Innovation.

The Federal Deposit Insurance Corporation (FDIC) reached a purchase and assumption agreement with JPMorgan to protect FRB depositors, estimating a loss of USD 13 billion.

Second Asset Ignoring Banking Crisis

Interestingly, the VIX indicator, which measures how traders price the risks of extreme price swings in the S&P 500 Index, hit its lowest level in 18 months at 15.6% on May 1.

It should be noted that overconfidence is the main driver of surprise moves and large selloffs in derivatives markets, which means that low volatility does not necessarily precede periods of price stability.

However, there is a probability that Ethereum makes a correction towards the points $1773.85 and $1454.15, according to monthly parameters. We see an ascending triangle with microwaves abcde of accumulation.

If Ethereum touches the $1801.25 point and continues its bullish course, the next point where we will see the price is between $2344.96; $2463.18; and 2874.39.

Maximum resistances at $3323.97; $3758.59; and $3916.88. Until these points Ethereum will appreciate more than 108% and from the breaking point of the triangle.

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Derivatives Show Modest Confidence

Ethereum quarterly futures are popular among whales and arbitrage desks, and they typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement for a longer period.

As a result, futures contracts on healthy markets should trade at a 5% to 10% annualized premium — a situation known as contango — which is not unique to crypto markets.

Since April 19, the Ether futures premium has been stuck near 2%, indicating that professional traders are unwilling to flip neutral despite ETH’s price testing $1,950 resistance on April 26.

The absence of demand for leverage longs does not always imply a price decline. As a result, traders should investigate Ether’s options markets to learn how whales and market makers value the likelihood of future price movements.

Deflationary Tailwinds Could Drive Price Up

Bitfinex reported that on Thursday, April 27, the annualized burn rate (submitted following the implementation of Ethereum enhancement proposal EIP-1559) exceeded the Ether issuance rate by 1,753 percent, one week after the deflation rate almost reached its annual peak at 3,933 percent in the previous week.

That being said, they explained that as the rate of deflation increases, individual Ether tokens become scarcer at a faster rate, making it likely that the price of the cryptocurrency will rise in the long run.

The increasing rate of deflation is associated with an increase in fees on the Ethereum network, where the base fee is also automatically calculated, which further increases during periods of heavy network traffic.

As noted, Ethereum Improvement Proposal (EIP) 1559, built into Ethereum's code during the London hard fork in August 2021, calls for all base fees paid by users to be burned, permanently removing tokens. traffic. Consequently, when the base gas fee increases, so does the rate at which the Ethereum burns.

Disclaimer: this article does not contain investment advice or recommendations. All investments and trades involve risk, and readers should do their own research when making a decision.

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