Ethereum, the second-largest cryptocurrency in the world, has been dealing with a consolidation period during which it has attempted to secure its support levels in order to foster growth. Yet, it seems that stagnation has become the rule instead, and surpassing this slump has proven to be an increasingly difficult task. In spite of these trends, most investors remain convinced that there’s a considerable possibility for returns and that all it takes to boost their revenue levels is to stay consistent and attentive. Naturally, having a solid strategy doesn’t hurt either. But that doesn’t mean that users aren’t looking forward to rallies, which, in the case of the Ethereum price USD, should take the coin to the elusive $4,000 level that has escaped the grasp of investors for quite some time now.
Dampened enthusiasm
The cryptocurrency market is characterized by its vibrant enthusiasm and interest in the latest technological developments associated with the market. However, over the past months, the eagerness to invest in the crypto market has been affected by the lack of regulatory certainty. Lawmakers are still not sure what they should do with cryptocurrencies exactly, and this means that investors are also not sure if their investments are secure. Naturally, this doesn’t feel encouraging and doesn’t empower investors to step out of their comfort zones and become bolder with their transactions.
July 2024 signaled the beginning of a new era for Ethereum with the approval of the ETH-based spot exchange-traded funds. However, unlike Bitcoin, Ethereum didn’t experience significant growth right away, and has actually been rather stagnant. However, most investors expect a rally to be on its way as more and more people gain exposure to the coin’s market price and have the ability to invest in the assets without the need to set up wallets and private keys. The ETFs are also convenient and simple to manage, being the best alternative for those who are unfamiliar with the intricacies of the blockchain.
Although cryptocurrencies operate as fully decentralized entities, they are still impacted by the movements of the markets around them and vulnerable to their fluctuations. Right now, the real estate environment displays clear signs of stress, and this could translate into changes for the Ethereum ecosystem as well.
Companies
Several notable crypto exchanges are facing court actions as well, further deepening the uncertainty around cryptocurrencies in mainstream markets. The accusations are mostly related to the alleged failure of the companies to obtain official registration as brokers while dealing with security investments, a charge that puts their operations outside the sphere of legality. Furthermore, several individuals are also dealing with accusations regarding illicit activities such as money laundering and tax evasion. Some of the cases go back to actions supposed to have happened almost a decade in the past.
This is part of the larger crackdown on crypto institutions, which has been ongoing for a few years now and commenced as a result of the catastrophic failures of several high-profile exchange platforms a few years ago. As a result of those events, many traders were left entirely without their crypto coins and lost considerable amounts of capital in one fell swoop. For those who made the risky move of putting much of their earnings or savings into cryptocurrency, these failures have meant absolute disaster and the beginning of financial ruin. And although lawmakers and regulators have set out to remedy the situation and ensure that something similar doesn’t re-occur in the future, they were faced by many obstacles along the way which delayed their ability to make more consistent progress.
As a result, the crypto community has been dealing with the uncertainty that results from not knowing the exact legal status of the assets in your portfolio. Many are also naturally uncomfortable with holding assets that are seen as fundamentally risky and unreliable, especially in the context of an economic recession.
Ether derivatives
Most professional traders who have operated in the marketplace for a long time prefer working with monthly contracts. The reason for this is the absence of fund rates, as in neutral markets, these instruments are likely to trade at a premium that can go from anywhere between 5% and 10%. Right now, the data reveals that the ETH futures premium and other derivatives are dealing with a lack of engagement as well. The reason is the reduced confidence of traders who feel safer holding on to their assets rather than risking them on a potentially losing endeavor.
The latest information and figures reveal that the futures premium dropped to 13% on June 10th, a decrease of 5% in the span of about four days. It is not yet a bearish structure or indicator, but there’s no denying the fact that it is the lowest this metric has ever been in over three weeks. In a way, this negative outcome has been entirely unexpected across the market, given the relatively positive features of the market right now. For instance, there are analysts who believe that exchange-traded funds could capture up to 20% of the inflows on similar blockchain instruments.
The future
So, what exactly does the future hold for the Ethereum market? It is always difficult to say with cryptocurrencies since they are so changeable and difficult to pin down. The fact that there are so many different factors that have the ability to influence the ways in which the coins operate means that investors are never 100% sure if the transactions they make will bring their desired results. During this time, it is more important than ever to have a strong but flexible strategy that will ensure the security of your assets while also leaving room for further growth.
Historical data can offer some indications as well, and remember that you shouldn’t engage in anything incredibly risky unless you’re also prepared to lose money. This is why investors are always urged to only use money whose loss they wouldn’t be affected by. As such, it will likely still be some time until the $4,000 level becomes a reality and is also secured as a support level.
In the meantime, you should look after your assets and ensure that the choices you make in the trading environment are more likely to lead to growth rather than loss.
