Ethereum Price Surge Fades Amid Trading Hesitation

Analysis points to underlying weakness in bullish conviction despite price jump to $2,470.

Ethereum Hits $2,470 Amid Ceasefire Environment

Ethereum (ETH) experienced a sharp 17% price increase last week, reaching $2,470, capitalizing on investor sentiment following news of a ceasefire established between Iran and Israel. This positive external factor led to a temporary unwinding of geopolitical risk positions, which briefly extended to oil prices dropping to a two-week low.

Traders Remain Cautious Despite Positive News Flow

However, despite the improved global risk climate, professional ETH traders and larger market players have not shifted decisively towards optimism. Market indicators such as ETH futures and options skew point to lingering caution.

In neutral conditions, ETH monthly futures typically trade at a slight annualized premium (5%-10%). Following Monday’s $2,470 spike, the indicator dipped below neutral Tuesday, registering a bearish 3% annualized premium. Persistently low demand for leveraged long positions has been noted since ETH failed to reclaim the $2,700 threshold.

Ethereum Market Cap Outpaces Fee Income, Raising Long-Term Questions

Investor concerns center on the significant disparity between Ethereum’s current market valuation ($293 billion) and its monthly network fee income (approx. $41 million). Even considering reduced rollup costs, the question remains: can network activity increase sufficiently sustain current staking rewards without necessitating coin emission?

Contextually, while Ethereum leads both total deposits and, marginally in fees, among L1s, the resource consumption required to maintain its network versus its recent performance prompts sustainability concerns.

Reversing insights from bite-sized charts: Trading volumes matching $293 billion imply every dollar of market cap requires only $8-4 million in monthly fees. This stark imbalance challenges long-term investment thesis without corresponding growth in fee income.

Breaking down fee environments: Ethereum’s monthly fee challenge. ETH at $41 million monthly fees slightly edges Solana ($8 million) and significantly compares to Tron’s $56 million. Possession matters — Tron captures more fee dollars with just $5 billion TVL.

Ethereum’s Total Value Locked (TVL) leads at $66 billion, versus $10 billion for Solana and dimmer BRBN’s less prominent position.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.