TLDR
- ETH price dropped 9.3% between March 26-28, testing the $1,860 level
- Futures premium hit a 1-year low, while options skew at 7% suggests professional traders lack confidence
- ETH is currently trading at a key support zone between $1,700-$1,900
- Some analysts predict a potential recovery to $4,000 based on historical patterns
- Short positions ($391 million) significantly outweigh long positions ($120 million), indicating bearish sentiment
Ethereum’s price has experienced a sharp decline in recent weeks, testing key support levels and triggering debate among analysts about whether this represents a buying opportunity or signals further downside. Market data provides a complex picture of both bearish pressure and potential recovery signals.
The second-largest cryptocurrency by market cap fell 9.3% between March 26 and March 28, testing the $1,860 level for the first time in two weeks. This correction led to over $114 million in liquidations of leveraged ETH futures.
ETH Price
The futures premium relative to the spot market dropped to its lowest level in over a year. Currently at 2% annualized premium, this suggests a lack of demand for leveraged long positions.
Some traders view this rock-bottom futures premium as a potential bottom signal. However, historical data shows this indicator is heavily influenced by recent price movements and rarely signals changes in the spot price trend.
Options markets tell a similar story. The 25% delta skew, which measures how the market prices put (sell) options compared to call (buy) options, currently sits at 7%.
When this metric rises above 6%, it typically indicates higher demand for hedging strategies, suggesting professional traders expect continued downward pressure. The current reading suggests a lack of conviction among these market participants.
From a technical perspective, ETH is positioned at a clear support zone between $1,700 and $1,900. This range has historically acted as a launch pad for recoveries.
Previous declines to this area have triggered strong price surges. One analyst points out that Ethereum is trading within a long-term macro price range between $1,700 and $4,500.
Despite underperforming compared to Solana during this bull market, ETH has still doubled from its 2022 low. This performance exceeds that of most other altcoins.
Sentiment, is not great.
The sentiment around Ethereum has reached extreme lows. According to one analyst, the current market sentiment score shows Ethereum has hit rock bottom at 14, signaling extreme fear and uncertainty.
Historical data suggests that when ETH reaches similar sentiment lows, as it did in late 2017 and 2021, the cryptocurrency often experiences a subsequent rally to new all-time highs.
Short-term traders appear heavily positioned for further downside. Data from on-chain analytics firm Coinglass reveals that traders betting on the short side are currently over-leveraged at $1,925, having built $391 million worth of short positions at this level.
Meanwhile, traders betting on price increases have built only $120 million worth of long positions at $1,855. This imbalance clearly indicates that bears currently dominate the market.
Ethereum faces several fundamental challenges. Some analysts argue that the sharp decline in network activity is the primary reason for ETH’s reduced appeal.
Others suggest that the shift toward layer-2 scalability solutions has significantly diminished the potential of base chain fees. With validators requiring compensation, the lack of capital inflow may require more ETH issuance, potentially affecting net returns from native staking.
Competition from other blockchains also places pressure on Ethereum. Networks like BNB Chain and Solana continue to gain traction, while specialized networks like Hyperliquid and Berachain target specific use cases.
The migration of successful decentralized applications (DApps) away from Ethereum presents another challenge. For example, Ethena, a synthetic dollar protocol currently holding $5.3 billion in total value locked (TVL), is transitioning to its own layer-1 blockchain after raising $100 million in December 2024.
Despite these challenges, Ethereum has an important protocol update approaching. The Pectra upgrade, scheduled for the coming weeks, could provide practical benefits in terms of base layer fees and overall usability.
Analysts suggest that if ETH can reclaim the $2,100 level, the cryptocurrency could move rapidly toward $4,000 in just a few months. The upcoming Federal Reserve monetary policy decision in mid-April may also provide renewed bullish momentum that could benefit Ethereum’s price trajectory.
At press time, Ethereum is trading near $1,870, with trading volume jumping by 50% over the past 24 hours. This increased participation from traders and investors compared to the previous day suggests heightened market interest at current price levels.
