Key Points:
With the decline in Ethereum's TVL and reduced network fees, ETH derivatives show weakened bullish interest, reinforcing ongoing risk-averse sentiment.
Increased layoffs in the U.S. and weakened seasonal hiring have traders waiting for new liquidity before rebuilding confidence in a short-term ETH rally.
Ethereum has risen 15% since Friday's low of $2,623, but derivatives indicators show that traders remain cautious. The lack of bullish leverage from top Ethereum traders, combined with declining Ethereum network transaction fees, undermines the rationale for continued upward movement. As a result, traders are questioning what changes are needed for Ethereum to robustly return to the $40,000 mark.
Since Monday, the demand for leveraged long positions in Ethereum has been almost absent, as evidenced by the perpetual contract funding rates. Under normal circumstances, this rate should be between 6% and 12% to offset capital costs. A significant portion of the hesitation stems from the uncertainty following the October flash crash.
On October 10, Ethereum's price plummeted by 20%, triggering widespread liquidations on both centralized and decentralized platforms, severely impacting trader confidence. According to DefiLlama data, the total locked value (TVL) in the Ethereum network dropped from $99.8 billion to $72.3 billion since October 9. The contraction in deposits adds pressure to Ethereum's price outlook, as investors prepare for softening demand.
Despite stable trading volumes, Ethereum network fees have decreased by 13% over the past week. This discrepancy raises concerns among investors about a negative feedback loop associated with the reduction in network deposits, which could ultimately lead to inflationary tendencies for ETH. After all, Ethereum's burn mechanism relies entirely on sustained on-chain activity.
When aggregating spot, futures, and margin positions, top traders on OKX have reduced their bullish exposure to ETH. The long-to-short ratio now indicates a 23% bearish inclination. More importantly, whales and market makers have repeatedly failed to maintain meaningful bullish leverage, indicating a lack of clear confidence.
Another driver of trader unease is the weakening U.S. labor market. Some companies have cited rising operational costs, and according to Yahoo Finance, consumer spending has declined following the U.S. government shutdown that extends until November 12. Reuters reported that U.S. companies announced layoffs of over 25,000 in November.
Adam Sarhan, CEO of 50 Park Investments in New York, reportedly stated, "There are no large-scale layoffs when the economy is strong." If layoffs accelerate, it could further undermine consumer confidence and weigh on risk assets, including Ethereum.
As income growth slows and costs rise faster than economic momentum, while large-scale AI infrastructure spending takes years to yield productivity gains or meaningful returns for the broader economy, the U.S. government must continue to expand debt to sustain growth. Large deficits favor alternative investments, which could become a potential trigger for Ethereum's price.
Despite the negative impact of weak employment on market sentiment, a weaker economy could also prompt the U.S. Federal Reserve to adopt a more accommodative stance. Additionally, the risk-off environment has eased following a reversal of the economic activity slowdown caused by the ongoing U.S. government shutdown.
Historically, cryptocurrencies have benefited in such environments; however, the current uncertainty in U.S. employment continues to erode trader confidence. Whether Ethereum can return to $40,000 remains unclear until major central banks inject new liquidity to support global growth.
Currently, investors seem more focused on tech stocks and the bond market, leaving limited room for short-term upward movement in Ethereum.
This article is for general informational purposes only and is not legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and positions of Cointelegraph.
Related: CoinGecko: Decentralized exchange trading volume surges driven by the memecoin trading frenzy
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
