Ethereum is attempting to consolidate its strength following the corrections that followed the rallies of March, during which price levels almost approached the previous all-time highs.
This is no easy task, especially when considering the fact that the last few years haven’t been the greatest for the cryptocurrency environment.
Binance data shows most investors are optimistic about the eventual outcomes for the market, which will likely be powered by growth in the ETH coin price.
Right now, the consensus is that the marketplace is more mature and better equipped to handle the demands of fluctuations and changes.
Growth
Crypto markets saw a growth of roughly 5.5% on May 15th, with the increase going to the total capitalization level. It arrived as a response in the aftermath of the release of data pertaining to retail sales and inflation in the United States, a metric that was predicted to impact the crypto environment.
In spite of this relatively sudden spike, Ether didn’t succeed in gaining a solid foothold in this momentum, continuing to underperform when compared to Bitcoin.
Since the beginning of the year, the difference between the two has been around 22%.
This isn’t exactly a surprise for most of those who are familiar with cryptocurrencies and who have been trading for a while.
BTC remains the most robust in terms of market cap levels, and there are no digital tokens that can rival its performance or pose a serious threat to its market dominance.
Those who believed that Bitcoin would eventually drop and let Ethereum claim its seat this year are more likely to be disappointed right now, although ETH’s movements are by no means lacking.
In fact, it has shown its strength and ability to thrive, an essential thing given all the difficulties it has gone through.
Macroeconomics
Macroeconomic factors and trends remain crucial for how cryptocurrencies change and evolve. Cyber tokens are highly reactive to any changes occurring in their environments, so it pays off to be aware of them as an investor and learn how to deal with them.
Right now, markets are under the influence of the positive response that arrived in the aftermath of the US consumer price index data.
Throughout April, the metrics have shown a year-over-year rise of close to 4%, in line with market expectations and predictions.
It is for the first time in a long while that the estimations became a reality and didn’t end up collapsing or being hindered in their progress by other factors. The main result of this development is that the United States Federal Reserve has a higher chance to implement measures that will stimulate the economy now.
Even if interest rates remain closer to 5.30% in a bid to control inflation, financial institutions are still quite likely to resort to purchasing securities to boost supplies.
Reducing discount rates for banks who borrow from central banks will add to the efforts as well.
In crypto’s case, weaker economic activity means that more funds will be brought to scarce asset markets. This naturally refers to cryptocurrencies, whose scarcity is one of the most critical features and a key driver behind their price movements.
Gold and stocks are also part of this category alongside crypto, and lawmakers are expected to issue more debt to fund these measures. Such an investment is also a prerequisite to avoiding the possibility of recession.
Derivatives
Crypto derivatives are financial contracts whose value comes directly from an underlying crypto asset. These holdings let traders profit from the movements and variations in prices even if they don’t actually own the assets directly.
The Ethereum derivatives draw value from the Ether coin itself and are entirely dependent on it as a result. The most popular types of derivatives are options, futures, and perpetual contracts.
Futures refer to an agreement made directly between a buyer and a seller in order to ensure the selling of a particular asset in the future. Both the date and exact amount are agreed upon ahead of time, with the terms typically being quite similar for all contracts.
The options let traders either buy or sell on a specific date in the future and at a set price. The buyer has the option not to purchase an asset if they so choose.
The perpetual contracts, also referred to as perpetual swaps or perpetual futures contracts, are perhaps the most prolific of all derivatives, with day traders, in particular, being especially keen on them.
The perpetual contracts get their name from the fact that they don’t have an expiry day, and the positions can be kept open indefinitely as long as the trader pays the funding rates.
At the moment, data based on the derivatives shows that market optimism is not at its best. Currently, Ether futures premiums are at 9%, with the figure remaining stable for more than two weeks.
The level shows a lack of enthusiasm concerning the decisions on the spot exchange-traded funds market, meaning that the general market sentiment among traders is in a neutral position.
Regulators
The regulatory landscape has been quite challenging for a while now as far as cryptocurrencies are concerned, with many investors feeling that conditions are not the best for trading in general.
The uncertainty caused stagnation as participants are unsure about how they should proceed in the future and what are the strategies that would yield the best results.
However, the results of the US presidential election have energized the crypto marketplaces and gave investors reasons to be optimistic.
Now, most anticipate that the ecosystem will enjoy strong performance and continue to rally in the upcoming year.
Most community members believe that the market conditions will become much more positive moving forward, and that the introduction of regulators that are more crypto-friendly in the ecosystem will create more favorable conditions overall.
The rise of Ethereum staking could also lend a helping hand to the struggling ETF marketplace, so that ETH is able to replicate the success Bitcoin enjoyed in this field.
If you want to ensure your portfolio remains safe this year, remember that there’s nothing that can provide better assurance than a strong strategy.
