Ether briefly surged to $3,000 on Tuesday, gaining 8%, but still lagged behind the broader U.S. stock market rally. Weak demand for ETH derivatives and rising competition from other blockchains kept traders cautious about further upside.
Key takeaways
- ETH futures premiums and options data show traders are hedging heavily, even after the recent rebound.
- Ethereum’s weekly fees fell 49%, while Tron and Solana posted a 9% increase.
Ether’s move toward $3,000 followed a broader crypto market recovery. Traders increased their expectations for new economic stimulus after turbulence in Japan’s bond market earlier this week.
Market sentiment improves, but ETH derivatives remain cautious
Investor confidence strengthened as expectations grew for a shift to a more accommodative U.S. monetary policy. The Federal Reserve ended its balance-sheet reduction program on Dec. 1, and markets expect an interest rate cut on Dec. 10. U.S. institutions also increased their use of repurchase agreements, boosting short-term liquidity.
Tech stocks have also rebounded. The Nasdaq recovered most of its November losses and now trades only about 3% below its record high. However, ETH derivatives data shows weak bullish conviction.
The annualized premium on ETH monthly futures stayed at 3% on Tuesday. Values below 5% reflect soft demand for leveraged long positions — unsurprising after Ether’s 22% decline over the past month.
ETH underperforms as global policy turns more supportive
Ethereum’s lag relative to U.S. equities raises concerns, especially as central banks adopt more expansionary measures. The Fed injected $13.5 billion through overnight repos on Dec. 1, the second-highest level in more than five years. The facility previously held more than $2.5 trillion during the heavy stimulus period of 2022.
Crypto demand also faces headwinds. Investors worry about excessive spending on AI infrastructure, stricter oversight of stablecoins, and China’s renewed crackdown on money-laundering and unlicensed digital-asset flows.
Options markets reflect this uncertainty. ETH put options traded at a 6% premium to comparable calls, up from 4% last week. This skew signals greater demand for downside protection, showing traders still doubt the strength of the rally.
Ethereum network activity declines while competitors strengthen
Ethereum’s network fees dropped to their lowest level in more than three years. Fees fell to $2.6 million over seven days, down from $5.1 million a month earlier. Decentralized exchange activity also slowed sharply, with weekly volumes falling to $13.4 billion from $36.2 billion in August.
Meanwhile, competing blockchains Tron and Solana saw a 9% increase in fees, highlighting growing usage. Market anxiety increased on Sunday when a long-inactive Ethereum address, active since the 2015 genesis block, moved 40,000 ETH, prompting speculation about a potential sale.
Ethereum’s Fusaka upgrade, scheduled for Wednesday, aims to improve scalability and wallet management. Despite this progress, overall demand for decentralized applications remains weak, and current trends offer limited evidence that ETH will outperform the broader crypto market.
