Ethereum recently faced a significant drop, falling 33.9% from $3,203 on August 2 to $2,188 by August 5, marking its lowest point in over seven months.
Ethereum recently faced a significant drop, falling 33.9% from $3,203 on August 2 to $2,188 by August 5, marking its lowest point in over seven months. This decline was part of a wider market correction in the crypto sector. However, Ether quickly rebounded by 23.7% in less than 36 hours, prompting traders to speculate on its ability to return to the $3,000 mark.
The initial downturn was influenced by several factors. Analysts point to the Japanese stock market, where the Nikkei 225 suffered a 13% intraday loss on August 5. This was triggered by the Bank of Japan's decision to raise interest rates for the first time in 17 years on July 31. Although the Nikkei ended August 5 down only 4.6%, the impact rippled across global markets, with the S&P 500 dropping 3% and gold falling 2.7%.
Ether's decline was particularly steep due to the inherent volatility in cryptocurrencies and the high leverage used by ETH bulls. This volatility also facilitated Ether's recovery to $2,500 by August 6.
On August 5, Ether’s futures premium briefly fell below the 5% neutral threshold but recovered to above 6% later that day. Although this is a decrease from the previous week's 11% level, indicating optimism, it suggests a balanced leverage demand between Ether bulls and bears.
Ether options markets and onchain metrics also demonstrated resilience. When fear prevails, put options trade at a premium over call options, pushing the delta skew above 7%. On August 5, the ETH skew reached 1.8%, maintaining a neutral stance. The last time bullish sentiment dominated was on July 23, when the skew dropped to -8%.
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