The volatility reflected on Ethereum’s chart was for everyone to see in the current market. After registering a value of $289 on 1st September 22:00 UTC, the price unceremoniously dipped down to $420, just 11 hours later. The larger ecosystem believed that the resistance implied just below $500 is possible too much to handle for Ethereum. According to Santiments’ recent data on Twitter, its Daily Active Addresses were under a severe decline as well.
The analytics platform believed that the largest altcoin has been indicating weak fundamentals all-throughout August and that’s why the bullish sentiment was quickly flushed over the past 24-hours. They stated,
“Daily Active Addresses vs Price Model continues to show a clear deficit in address activity to justify ETH traders’ bullish euphoria quickly faded.”
However, it is likely that Ethereum’s fundamental weakness might not stop the altcoin’s pursuit of attaining a position above $500.
Deribit ETH options record new highs
According to Deribit’s recent institutional newsletter, Ethereum concluded a drastically positive period for itself in terms of Options activity. The exchange stated that the total turnover registered by ETH Options topped $15 billion in August 2020, which was 44% more than in July 2020.
The number of ETH option contracts recorded was also an all-time high with 2,477,195 ETH contracts traded, up by 32% from July 2020. If the chart above is observed closely, it can be pictured that ETH activity has slowly eclipsed Bitcoin‘s on Deribit in August 2020.
The bullish sentiment attached to Ethereum was verifiably strong in spite of the massive price dump 24-hours before.
How does Sentiment help Ethereum now?
It is extremely important to understand that the lack of Daily Active Addresses has also been a price blessing for Ethereum. The decline of DAA is in direct correlation with the usage of DeFi, as the congestion was pricing out unique transactions taking place on the network.
However, the benefits are evidently being noticed with ETH attaining yearly-highs on a consistent basis.
At the moment, the probability of Ethereum closing above $520 is 14%. In comparison, the probability in July was only 3%, which means that the bullish sentiment was reciprocated strength in spite of weak fundamentals.
In the long-run, it can be detrimental for Ethereum’s adoptions and organic growth is vital for long-term sustenance but for the time being, price-performance meant everything to the market, and Ethereum is standing strong on those foundational grounds.
