Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has seen a turbulent market performance in recent weeks. Despite the bearish sentiment and network dips, the price of Ethereum has shown signs of resilience. As of now, the live Ethereum price is $2,916.04, with a 24-hour trading volume of $6,041,178,931. The cryptocurrency has experienced a slight increase of 0.49% in the last 24 hours, maintaining its position as a pivotal player in the digital asset space.

ETH/USD 24-hour price chart (source: CoinMarketCap)

Speculative Divergence and Short-Term Holder Concerns

Analytics firm Glassnode’s recent newsletter highlighted Ethereum’s underperformance compared to Bitcoin in the current market cycle. Following Bitcoin’s block subsidy halving in April, both BTC and ETH saw price declines. 

However, Ethereum’s corrections were notably shallower than those of Bitcoin, indicating some level of market resilience. Despite this, the deepest drawdown for Ethereum this cycle reached -44%, which is significantly higher than Bitcoin’s -21%.

Short-term holders (STHs), those holding ETH for 155 days or less, are particularly at risk. With their aggregate cost basis around the $3,000 mark, any further price drops could push these investors into losses. Glassnode’s analysis of the Market Value to Realized Value (MVRV) metric suggests that if Ethereum experiences additional downside volatility, these investors might panic and sell off their holdings.

Inflationary Trends Post-Dencun Upgrade

The recent Dencun upgrade has introduced a shift in Ethereum’s supply dynamics, marking an end to its deflationary trend. Data from CryptoQuant shows that the total supply of Ether increased from 120 million to 120.1 million between March 12 and May 7. 

This inflationary trend emerged due to a reduction in transaction fees following the upgrade, which decreased the amount of Ether being burned. Despite this shift, Ethereum’s fundamental value, particularly its utility in decentralized applications (DApps), remains strong.

Long-Term Holder Behavior and Market Sentiment

Long-term holders (LTHs) of Ethereum are taking a more patient approach. According to Glassnode, these investors, who typically hold for more than six months, are not rushing to divest despite their profitable positions. This behavior contrasts with previous market cycles where LTHs increased their sell-off during all-time highs. Their current reluctance to sell suggests confidence in Ethereum’s long-term potential.

Market sentiment remains cautious, especially with regulatory developments in the U.S. regarding the approval of spot Ether exchange-traded funds (ETFs). However, the increase in new Ethereum addresses, as reported by Glassnode, indicates a growing interest and potential influx of new investments into the Ethereum ecosystem. 

ETH Derivativatives Data Analysis

Moreover, the open interest in options has seen a slight increase of 1.63%, reaching $6.38 billion. This rise indicates that while trading volume is down, there are more outstanding options contracts, suggesting that traders are holding onto their positions longer or setting up for future market moves.

However, the total trading volume in Ethereum derivatives has seen a considerable decrease of 44.97%, now standing at $12.38 billion, according to Coinglass. This sharp decline indicates reduced trading activity and possibly lower investor engagement or reduced market speculation.

Analysts Perspectives on Ethereum’s Future

Prominent crypto analysts have weighed in on Ethereum’s price trajectory. Analyst Michael van de Poppe anticipates a crucial market reversal for ETH in the coming weeks, which has generated considerable attention within the cryptocurrency community. Similarly, experienced market analyst Peter Brandt has analyzed Ethereum’s price chart, suggesting that while the pattern is too elongated to be considered a flag, the potential for a channel pattern introduces the possibility of price movement in either direction.

Despite the prevailing market skepticism, there are signs of potential recovery for Ethereum. The Relative Strength Index (RSI) on the 4-hour chart points to possible short-term upward movement. As Ethereum continues to navigate these challenging market conditions, the broader crypto community remains watchful, anticipating significant changes that could reshape the landscape of digital assets.