ethereum [ETH] Merge hopes remain high, especially now that D-Day is less than two weeks away. The same cannot be said for ETH demand, which has been heavily influenced by macro factors especially in the first week of September. Nonetheless, as the tide turned over the past three days, there was a sharp recovery in demand for ETH.
As sentiment eased, ETH, along with most of the top cryptocurrencies, appeared to be trending downwards at the start of the week. Instead, the market provided a pivot in the middle of the week which has led to further gains. ETH responded with a bullish push above $1,700, albeit briefly at press time.
Estimation of current demand for ETH
ETH whales have resumed accumulation, thus providing support to the upside. This is evident from the increase in the number of ETH addresses holding more than 1,000 ETH. The same addresses turned lower earlier in the week, confirming the outflow and supporting a minor price drop.
Changes in investor sentiment observed in addresses holding more than 1,000 ETH also reflect a change in open interest. The futures open interest metric has registered an uptrend since September 6, in line with the mid-week uptrend. This confirms a change in demand in favor of the bulls.
The options volume put/call ratio of ETH shows a similar observation after the pivot over the past two days. The number of call options is currently higher than put options, which weighs on the bullish side.
ETH may not be in demand yet
ETH’s current performance is weaker than expected. Many investors expected a major rally, perhaps above $2,000 by now. The level of ETH demand currently in the market has fallen short of those expectations. Possibly due to weak sentiment in line with unfavorable macro-economic conditions.
The level of demand is reflected in Ethereum’s buy to buy ratio which is currently at 0.51. The ratio measures shorts versus long volumes in the futures market and its current data shows that there is still a significant amount of short volume in the market.
A buy to buy ratio above one confirms that the futures buy volume is greater than the sell volume. In this case, ETH is not there yet, even though the merge is approaching.
One of the possible effects is that the countdown to the merger has done little to affect the high demand for ETH. Potential upside may still be limited but there is still ample time for this to happen, especially if market conditions allow.