The previous 3 months’ performance of Ethereum (ETH) hasn’t been great for investors. Furthermore, correction of 50% correction that has taken place after April 3rd has led to the altcoin testing the support mark of $1,800 – a first-time occurrence after July 2021.
The index for DXY reached the highest it has been in 2 decades on May 13 as a result of investors seeking refuge in the US dollar due to the volatility in the stock market. DXY compares the value of the USD to a collection of the world’s most valuable currencies, such as the Japanese yen (JPY), the British pound (GBP), and the euro (EUR).
The yield of the U.S. Treasury over a period of 5 years also rose to the highest it has been since 2018, August, reaching 3.10% on 9th May, indicating that investors want higher returns to account for inflation. Simply put, macroeconomic data exhibits risk-averse investor sentiment, which contributes to the decline of Ethereum.
A reorganization consisting of 7 blockchains on the Beacon Chain of Ethereum on May 25th further stoked panic among Ether traders. Because one of the competing blocks received more network users’ support, a valid transaction sequence was removed from the chain. Fortunately, this circumstance is not unusual and may have been caused by a bug or maybe, a miner possessing abundant resources.
According to data from Coinglass, long-term leverage traders saw $160Mn in total liquidations at exchanges for derivatives as a result of Ethereum’s 11% price correction.
Bulls Placed Bets On Ethereum At $2,100 As Well As Higher
The May monthly open interest when it comes to Ether options expiry stands at $1.04Bn. However, the actual amount will be significantly less because bulls were overconfident. These traders may have been duped by the brief surge ending at $2,950 on 4th May, as their wagers for the options expiry on May 27 go over $3,000 in value.
Since almost zero percent of the (buy) call options for May 27th have been bought for less than that price, the drop below $1,800 caught bulls off guard.