Ether (ETH): Investors fear the worst

Uncertainty related to impending regulation, potential competition from tech giants and a market close to exhaustion are all factors influencing the price of ether (ETH). After a 42% rally over a three-week period, the digital asset peaked at $3,580 on April 3 and since then a 12% correction to $3,140 has taken place.

Investor fear

Tech giants launching their own smart contract platforms and regulatory uncertainty may have impacted investor sentiment. Indeed, due to these factors, there is a deteriorating market conditions. As a result, a change is taking place in the behavior of professional traders.

Ether/USD price at FTX. Source: Trading View

On April 6, the Financial Times reported that Meta intends to introduce loan services and virtual currency. This approach aims to explore other sources of income for Facebook, WhatsApp, Instagram and Messenger. This suggests that cryptocurrencies, although facing a downtrend, are not being abandoned entirely by companies.

For his part, US Senator Pat Toomey, member of the Senate Banking Committee, has drafted a bill proposing a regulatory framework for stablecoins. Legislation requires issuers to back their reserves with stablecoins to assets “that are cash and cash equivalents or Level 1 high-quality liquid assets denominated in US dollars”.

A declining annualized premium

A trader can gauge the level of upside in the market by measuring the fee spread between the futures contract and the regular spot market. Unlike a perpetual contract, these fixed-timeframe futures do not have a funding rate, their price will be very different that of ordinary spot exchanges.

Futures contracts are expected to trade at an annualized premium of 5 to 12% in healthy markets. Yet, as noted above, Ether’s annualized premium has fallen from 6% on April 5 to 4.5% currently.

Ether’s downtrend is deepening day by day towards even lower levels. In these circumstances, investors are beginning to fear the worst, especially as the major institutions are beginning to take measures with the aim of tightening the rules relating to the use of electronic currencies.

Source: Cointelegraph

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