Since the beginning of April, the performance of Ether has been less satisfying for its holders. The 50% correction on April 3 triggered the altcoin to test the support at around $1,800.
Demand for Larger Returns
On-chain data shows that the value of Bitcoin’s whale ratio has remained high. The sign could indicate that the price is going to fall. Bitcoin was also trading lower throughout the day. It fell under $29,000. The overall market capitalization of cryptocurrencies is down around 3%.
Due to the volatility in the stock market, investors sought shelter in the US dollar. On May 13, the DXY index, which measures the dollar’s performance against a basket of foreign currencies, hit its highest level in over two decades.
The rise of the US Treasury yield, which hit a high of 3.10 percent on May 9, was a sign that investors demand higher returns to compensate for inflation. Hence, it explains the decline of Ether.
Another issue that caused panic among the investors was the reorg of the Ethereum blockchain on May 25. During this event, a block got more support from other blocks, which knocked a valid transaction sequence off the chain. Although this issue is not uncommon, the cause could have been a bug or a miner with high resources.
According to data from Coinglass, the biggest victims of the 11% price decline were leverage traders. They had seen a total of $165 million in liquidations at various exchanges.
Bulls are Betting High Above $2K
The open interest in the Ether’s May options contract is around $1 billion, which is lower than the figure implied by the market. The bulls were expecting a spike in the price at the end of May. However, users likely exaggerated these expectations due to the extension of the bets on the May 27 options expiration beyond $3K.
The sudden decline in the price of the Ether to around $1,800 surprised the bulls. In addition, most of the call options for May 27 have not been placed below this level. The 0.94 call-to-put ratio indicates that the immense open interest in May puts dominated by the buy-side, while the large open interest in the May calls is mainly due to the sell-side. Even though the price of Ether is near $1,800, every long bet that’s currently on the bulls is likely to turn worthless.
If the price of Ether remains below $1,800 at 8:00 am on May 27, all of the call options placed below this level will not be available. It means that a right to buy Ether at a higher price is worthless if the asset price declines below that level on the day of the expiration.
Other Cryptos are Not Steady Yet
BNB rose above the 20-day moving average (EMA) on May 24, but the bears likely defended the long-term trendline support. The relative strength index (RSI), near the midpoint, does not give a clear advantage to the bulls.
The bulls are maintaining the support at $0.38. However, the XRP could not sustain its higher levels. The bears are trying to break the support at $0.38 by selling at lower levels. However, the long-term trendline support is likely to be defended by the bulls. If the demand for the price continues to rise, the bulls might push the price above the 20-day EMA to $0.46.
The price of Cardano has been in a tight range since May 19, between $0.49 and $0.56. It suggests that the bulls are trying to establish a higher low. However, the bears are holding strong resistance at higher levels.
The price of Polkadot has been holding steady at the $10.37 level for the last few days. However, the bulls could not sustain their higher levels and sold off to the 20-day EMA. It suggests that the bears hold their positions and try to lower the price.