The price of ethereum (ETH) has settled around $2,300 following a sharp decline of 20% over a span of three days, reaching a low of $2,255. This downturn impacted market sentiment significantly, as Ether had not been priced in this range since October 2024. Nonetheless, the ETH derivatives market is beginning to exhibit early indicators of recovery and strength, hinting at a possible rebound towards $2,800.
The 30-day ETH futures are currently trading at a 7% premium compared to the spot market, showing a slight increase from 6% two days prior. Premiums ranging from 5% to 10% are viewed as neutral, as traders generally anticipate greater returns for a longer settlement period. This adjustment implies reduced bearish pressure below $2,600, which may enhance confidence among bullish investors.
Adverse macroeconomic conditions hinder ethereum price recovery
The trek for ETH to reach $2,800 again may require several weeks or even months, yet data points to the likelihood that the lowest price has already been surpassed. Nevertheless, the speed of recovery is contingent on investor caution, with recent US unemployment and inflation statistics raising apprehensions.
US unemployment claims for the week concluding on Feb. 22 hit a seasonally adjusted 242,000, marking the highest level in three months. Furthermore, US pending home sales for January plummeted to a record low, decreasing by 4.6% from the previous month, according to the National Association of Realtors. Economists polled by Reuters, as reported by Yahoo Finance, had forecasted a lesser decline of 1.3%.
Investors are growing increasingly uneasy regarding the new import tariffs announced by US President Donald Trump, which are aimed at goods from China, Canada, and Mexico. Trump has also warned of a 25% tariff on imports from the European Union, prompting the EU to pledge a robust and swift response to perceived unfair trade restrictions, as per CNBC.
The shares of Nvidia dropped 3.3% on Feb. 27, despite surpassing quarterly earnings expectations and offering strong guidance for Q1 2025, reflecting investor anxiety. Concurrently, gold prices fell by 2.2% over two days, dipping to a two-week low of $2,870, underscoring broader market concerns that are affecting even traditionally safe investments.
Ether options markets exhibit resilience despite the price plunge
At present, the ethereum options skew stands at -2%, remaining comfortably within the neutral range of -6% to 6%. This indicates resilience among whales and market makers, particularly noteworthy considering that ethereum price has dropped by 20%. Despite the decline, there is no apparent rush to acquire put options, signifying confidence in the market.
The current market landscape mirrors that of Feb. 3, when ETH’s price plummeted 38% in under three days, falling from $3,437 to $2,124. During that time, the ethereum delta skew metric hovered near zero, denoting strong market confidence. Ether swiftly recovered to $2,750 within a single day and maintained the $2,550 support level for two subsequent weeks.
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The trajectory for ethereum to reach $2,800 remains feasible as its primary competitor, Solana, encounters diminishing momentum within the memecoin domain. Meanwhile, Ethereum retains its supremacy in total value locked (TVL), driven by robust demand for liquid staking, lending, yield aggregators, and automated onchain liquidity protocols.
The rate of ETH’s price recovery predominantly hinges on Ethereum executing its scheduled upgrades and promoting incentives for projects to develop their own layer-2 solutions. This, in turn, enhances the utility of the base layer and fortifies staking rewards, establishing a clear route for ethereum price recovery.
This article is intended for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed are solely those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.
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