Key Takeaways:
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Ether derivatives data show weak demand for leveraged bullish positions.
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Corporations and tradfi favor independent layer-1 chains, challenging Ethereum’s dominance over decentralized finance.
Ether (Eth) climbed to $ 4,518 on Tuesday as entrepreneurs showed a higher risk of appealing in compliance with a moderate 0.1% increase in US consumer inflation. However, under the surface, the derivatives data suggest the strength of the rally may be overstated, especially since some major companies are pursuing their own Layer-1 techniques rather than building Ethereum’s layer-2 ecosystem.
The Eth Futures Aggregate open interest rose to $ 60.8 billion, from $ 47 billion a week before. However, the rising of stems mainly from the appreciation of ETH prices, as the open interest in the terms of the ether remains 11% below July 27 peak of 15.5 million ETH.
Eth Derivatives’ derivatives are weak demand for leveraged bullish positions
Derivatives metrics show reduced demand for Leveraged bullish exposure Despite the strong ones obtained in the market market.
The Eth Perpetual Futures Annualized Premium is 11%now, considered neutral. Readings above 13% indicate excessive demand for long positions, which was last observed on Saturday. The lack of momentum from the aggressive merchant is noticeably provided by the greatness of the recent price rally.
One must evaluate ETH’s monthly futures to obtain an additional perspective, given that the eternal contracts are a preferred instrument by entrepreneurs. Contracts with a set of expiry date are usually trading in a 5% to 10% annual premium to see prices, reflecting the extended period of the regulating.
After reaching 11% on Monday, the premium fell 8% on Tuesday. Despite a 32% increase in ETH prices over the past 10 days, the seizure of long interest has never returned to the levels that have been seen in the past bullish, suggesting that it is restless about Ethereum foundations and onchain activity trends.
X User Techleadhd their own chains Instead of adopting Ethereum Layer-2 solutions. While this perspective improperly assesses Coinbase and Robinhood, which remains anchored to the base layer of Ethereum, it describes that some businesses prefer Layer-1 control and specialized infrastructure.
Tokenized assets, including stablecoins supported by traditional reserves, require less decentralization to work effectively. Products from JPMorgan and Stripe aim to keep users within closed ecosystems, disabled with backwards in public networks. For such models, the integration of the Ethereum Layer-2 offers limited incentives.
Poor Ethereum Onchain activity and Layer-1 competition
There is a growing institutional demand for the ETH, which is reflected in the funds of funds exchanged by the funds, but the onchain metrics tell a less optimistic story. The total amount locked (TVL) in the Ethereum network fell 7% in the past 30 days.
TVL refused 23.3 million ETHs from 25.4 million ETH a month before, while weekly base layer fees cost $ 7.5 million, a 27% fall from last month. More noticeable, Ethereum’s weekly fees remain lower than major competitors, with Solana $ 9.6 million and tron at $ 14.3 million.
Related: Bitmine targets a large $ 24.5b top as Sharpink grows Ether War Chest
Many major players dedicated to their own Layer-1 solutions reinforce Ethereum’s competitive concerns as decentralized infrastructure for web3 and financial applications.
Ultimately, the nominal increase in Eth Futures open interest is largely a function of the 51% ETH rally in the past 30 days, not a progress that is being demanded for long positions.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
