The cryptocurrency market is known for its volatility, and social media platforms like Crypto Twitter are often abuzz with speculation and misinformation. One such narrative that has been circulating lately is that Ethereum’s ether (ETH) is dead and on the verge of collapse. However, a closer look at the data suggests otherwise.
Ethereum Derivatives Soar
One indicator of investor sentiment is the cumulative open interest in perpetual and standard futures contracts. According to data from CoinGlass, this metric has surged to a record 6.32 million ETH, worth over $27 billion. This represents a 17% month-to-date gain, indicating that investors are increasingly betting on higher ETH prices.
The uptick in open interest is closely tied to the price of ether, which has surged 35% to $3,400 this month. This mirrors the performance of bitcoin, which has also seen significant gains. The correlation between the two leading cryptocurrencies suggests that investor sentiment is shifting in favor of Ethereum.
Premium Expansion and Cash-and-Carry Trades
A key metric for evaluating market sentiment is the premium, or the gap between three-month ETH futures and spot prices. According to Velo, this premium has expanded to an annualized 16% on offshore exchanges Binance, OKX, and Deribit. Meanwhile, the front-month premium on the Chicago Mercantile Exchange (CME) has risen to 14%.
This expansion of the premium is significant because it can lead to increased interest in cash-and-carry trades. This strategy involves taking a long position in the spot ETF while simultaneously shorting the CME futures. As the price differential between the two markets increases, investors can capture this spread by executing these trades.
Increased Activity in Ether Options Market
The surge in ether prices has also driven up activity in the ether options market listed on Deribit. At press time, over 2 million contracts are active or open, representing the highest level since late June. In notional terms, the open interest stands at $7.33 billion.
Ethereum-Based Applications Reach New Heights
The value of assets locked on Ethereum-based applications has reached a new high, with a total of $65 billion as of Wednesday. This figure last seen in May 2022 is a testament to the growing adoption and usage of Ethereum’s ecosystem.
A significant chunk of this value is held on three applications: Liquid staking protocol Lido, which holds over $32 billion in locked ether; Aave, a lending protocol that holds $26 billion in various assets; and restaking platform EigenLayer, which holds $14 billion.
Revenue, Fees, New Wallets, and On-Chain Volumes Surge
Data from The Block shows a bump in revenue, fees, new wallets, and on-chain volumes on Ethereum. While the metrics are not yet at an all-time high, they do indicate elevated levels of activity compared to the period from May to September.
Solana Network Dominates DeFi Activity
While Ethereum’s ecosystem is experiencing growth, the Solana network and its applications continue to dominate DeFi (Decentralized Finance) activity. This can be attributed to its broader retail appeal and cheap fees.
Stablecoin Data Shows Ethereum’s Growing Lead
According to stablecoin data, Ethereum has more USDT hosted than Tron for the first time since June 2022. The total value of USDT on Ethereum stands at $60.3 billion, surpassing the figure on Tron ($57.94 billion).
Sentiment Factors and ETH’s Resurgence
One sentiment factor that could be contributing to the resurgence in ETH prices is the election campaign led by president-elect Donald Trump. His promise to reduce regulatory burdens on crypto has sparked hope among investors for a decentralized finance bull market.
This, combined with the growth of major DeFi tokens since early November, suggests that demand for ETH is increasing. As investor sentiment shifts in favor of Ethereum, it remains to be seen whether this trend will continue or if the "ETH is dead" narrative will ultimately prevail.
Conclusion
While the cryptocurrency market is known for its volatility, the data suggests that Ethereum’s ether (ETH) is not as dead as some would have you believe. With increased investor interest in derivatives and options markets, elevated activity on Ethereum-based applications, and a growing lead in stablecoin adoption, it seems that ETH prices will continue to rise.
The question remains whether this trend will be sustained or if the market will eventually correct itself. However, for now, it appears that the "ETH is dead" narrative has been debunked by the data.
