Ethereum Traders See Limited Upside Beyond $2.6K, Despite Recent Gains

While Ether (ETH) has seen a price increase of 7% since October 7, reaching $2,615, recent data suggests that traders are skeptical about the cryptocurrency's ability to achieve significant gains in the near future. This caution contrasts with growing optimism surrounding Bitcoin (BTC), as Ether’s options market reflects more reserved expectations for upward movement.

Ether Options Reveal Cautious Sentiment

Data from decentralized finance (DeFi) options protocol Derive shows that Ether traders are positioning for limited short-term price gains. According to Derive’s report, there were 2.5 times more call options sold than bought, signaling a prevailing belief among traders that Ether’s upside potential is capped.

When traders sell call options, they typically expect the asset’s price to remain stable or decrease, whereas buying call options suggests optimism for price appreciation. At the end of September, Ether calls sold accounted for 34.5% of the market, while calls bought made up just 15.5%. This stark difference highlights a cautious sentiment among traders, with many doubting that Ether will see significant price growth in the near term.

Nick Forster, founder of Derive, emphasized this in an October 13 report, stating, “The relatively small number of calls bought supports the idea that ETH’s potential for substantial price gains may be limited right now.”

Bitcoin Open Interest Shows a Different Story

While Ether’s price growth appears constrained, Bitcoin is showing stronger support in its options market. Bitcoin open interest (OI) at strike prices of $75,000 and $100,000 suggests traders are positioning for considerable movement, with these levels acting as potential breakout points.

Forster noted that these levels could serve as "key barriers or breakout levels" for BTC in the near term, further emphasizing the contrast between trader expectations for Bitcoin and Ether.

This divergence between Bitcoin and Ethereum will be closely watched as the U.S. presidential election on November 5 draws near. The election could introduce volatility to the cryptocurrency market, with the performance of Bitcoin and Ethereum offering insight into broader market trends as the political landscape shifts.

ETH's Short-Term Concerns: Limited Calls, Declining Onchain Activity

The cautious sentiment surrounding Ether's potential also stems from declining decentralized application (DApp) activity on the Ethereum network, with recent reports highlighting a 23% drop in DApp usage. This decline, coupled with lower demand for Ether-based financial products like spot ETFs, has contributed to muted optimism.

In particular, U.S.-based spot Ether ETFs have struggled to attract inflows, with net outflows of $6 million recorded in October. By contrast, Bitcoin ETFs saw inflows of $810 million between October 11 and 14, further signaling that traders are gravitating toward Bitcoin over Ethereum instruments.

This growing preference for Bitcoin is significant, as it suggests that while Ether may hold long-term value, its immediate prospects are less appealing to traders.

Long-Term Confidence Remains in Ethereum

Despite short-term challenges, long-term confidence in Ethereum remains strong. Onchain data shows that nearly a third of all Ether—28.9%—has been staked, reflecting strong interest in the asset’s future potential. Staking allows ETH holders to earn rewards while locking their tokens on the network, and the large percentage of staked ETH indicates that many investors are betting on Ethereum’s long-term growth.

This optimism is further supported by Ethereum’s ongoing development efforts. Vitalik Buterin, Ethereum’s co-founder, has highlighted the need for improvements to the network’s efficiency, including transaction finality and reducing network congestion. These upgrades could bolster Ethereum’s performance and make it more competitive in the evolving blockchain ecosystem.

In the meantime, Ethereum’s supply continues to increase, and the network’s adoption of lower-fee layer-2 solutions has also slowed the burn rate of ETH, contributing to a more tempered market outlook.

What’s Next for Ethereum?

As Ether hovers around $2,615, its price trajectory remains uncertain. While the long-term fundamentals of Ethereum are solid, traders are expressing caution regarding its immediate potential. The prevailing sentiment, as reflected in options data, suggests that Ether’s upside may be limited in the short term, particularly as Bitcoin continues to capture the market’s attention.

The upcoming U.S. election, advancements in Ethereum’s network, and shifts in DeFi activity will all play a crucial role in determining Ether’s future direction. For now, traders appear content to take a more conservative approach, waiting to see how the broader crypto landscape unfolds before placing bigger bets on Ethereum.