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Ethereum's Unvarying Market Position
From July 21 onward, Ethereum’s price has been steady, floating between $1,800 and $1,900. This unvarying trend has elicited a feeling of unease and doubt among investors, in spite of recent encouraging events, such as the launch of Ethereum-based stablecoin by PayPal and an increase in applications for Ether-based exchange-traded funds (ETFs).
PayPal’s Involvement in Cryptocurrency
PayPal's foray into the crypto world could represent a significant leap towards mainstream acceptance for Ethereum. Nonetheless, the move has sparked worries about centralization and the potential forfeit of control over personal finance.
Interest in Ether (ETH) ETFs
Trends indicate that the U.S. Securities and Exchange Commission is experiencing an inflow of applications for Ether-based ETFs. Major asset management companies seem to be following suit by establishing spot Bitcoin ETFs.
Ethereum's DApp Performance Woes
The Ethereum network faces difficulties due to elevated transaction fees, including the ones associated with smart contracts. USD 4 is the average transaction fee for the past couple of months, hindering the appeal for its decentralized apps (DApps).
Ether Deposits and Active Users in Decline
The total value locked (TVL) in the Ethereum network deposits has witnessed a significant slump, hitting a three-year low as DefiLlama reports. Numbers indicate that Ether deposits have seen a sizeable drop from 14.75 million three months ago to 12.9 million, showing an overall reduction.
Users Reluctant to Use DApps?
To understand if the drop in Ethereum's TVL is linked with a decrease in user base, it helps to monitor DApp usage. Some DApps, like gaming platforms and marketplaces, aren’t necessarily deposit-heavy. However, a shrinking number of active DApp users—down by a full 25% in the last 30 days—may reveal a discontent in the user base over high transaction costs.
Ether Derivatives: The Predictive Tool
Probing into Ether derivatives could shed light on the stability of the $1,800 support level based on how ETH investors are positioned. Ether's quarterly futures, favored by whales and arbitrage desks, often trade at a slight premium suggesting a 'contango' state, a common occurrence across markets.
Tensions Balancing Between Bulls and Bears
Since July 16, professional traders in the Ether market haven't shown bullish leanings, as suggested by the futures premium, known as the basis indicator. Presently, at 5%, it teeters on the edge of a neutral-to-bearish line, indicating an equal demand between leveraged long and short positions.
Competitive Challenge for Ethereum
The upcoming launch of Coinbase's Base network on August 9 might pose hurdles for Ether's bid to breach the $1,900 barrier. As several teams within the ecosystem announce their offerings for the Base network, incorporating Uniswap's version, the Ethereum network faces stiff competition from established smart contract platforms and richly equipped challenge.
