Data shows that options traders are making bearish bets against Ethereum, the second-largest cryptocurrency, at an increasing rate. Investors have dumped nearly $110 million into contracts. As long Ethereum’s price is below $1,800 in April, these contracts will continue to record profits. Ethereum’s price, at the time of writing, is hovering just above $1,600, which is a 2% drop over the past day. Compared to the significant growth seen months ago by Bitcoin and XRP, gains today have been relatively small.
Bearish Sentiment Intensifies
Recent data from Deribit has shown that options traders have taken a larger bearish stance on ETH price, indicating a shift towards a bearish outlook. The substantial investment of $110 million into contracts contingent on Ethereum's price staying below $1,800 suggests a strong expectation of further price declines.
Ethereum’s price today sits just over $1,600, down 2% in the past day. This slump is even more notable given the recent minor increases in Bitcoin and XRP, calling focus to Ethereum’s current faltering performance in the market. Not to mention, Ethereum short sells also recently hit an all-time high.
Ethereum short sells are at an all-time high [as] institutions are driving the price down - Zach Burks
Network Activity Declines
User activity on the Ethereum network is rapidly declining, contributing to the bearish outlook. In fact, daily unique traders are at their 12-month low. This drop is indicative of a broader drop in participation and engagement from the Ethereum ecosystem.
Weekly code contributions on the Ethereum network have nosedived 67% so far this year. This significant decrease in developer activity is troubling when you consider the future development and innovation that the platform will rely on.
“It’s time to face reality,” said web3 marketer Stacy Muur last week. “This isn’t the ‘efficiency zone,’ I’m afraid. This is stagnation.”
Market Impact and Alternatives
Bearish bets are stacking it up, and prices are tanking. At the same time, network activity is slowing, code contributions have tanked, creating a gloomy picture for Ethereum. Last week, one trader took a jaw-dropping $74 million loss as Ethereum’s price tanked. In the background, a DeFi project dumped $8 million of Ethereum. Ether—the cryptocurrency that underpins the Ethereum network—has lost over 40% of its value since February.
XRP may be the unlikely winner, but only if Ethereum fails to address its growing concerns. As investors seek alternatives, XRP may attract capital and attention, potentially leading to price appreciation.
