Ether (ETH) experienced a significant drop of 14.8% between April 13 and April 14 and has since been trading below $3,300. Each time the price of ETH tested the $3,000 level, buyers intervened, strengthening the support. However, some traders remain concerned that ETH might not reclaim $3,500 without a stronger narrative.

Analyst DeFiSurfer808 suggests that Ether's price weakness compared to Bitcoin (BTC) stems from a lack of fresh fundamentals, as the Ethereum native token lacks "some new narrative and flows."

Ethereum deals with constant regulatory uncertainty

Over the past two months, Ether underperformed Bitcoin by 16%, a trend that intensified on April 9 after Jan van Eck, the chief investment officer of VanEck investment firm, mentioned that U.S. requests for a spot Ether ETF might be rejected in May. Van Eck’s comments follow a period of inaction by the U.S. SEC concerning seven pending applications for spot Ether ETFs, as reported by Cointelegraph.

Even if Ether is classified as a non-security asset, ongoing disputes between regulators and exchanges dampen investors’ enthusiasm for the broader Ethereum ecosystem, including layer-2 solutions, decentralized finance (DeFi), and nonfungible token (NFT) marketplaces.

On April 11, Uniswap Labs announced that it was "ready to fight" after receiving a potential enforcement notice from the U.S. Securities and Exchange Commission (SEC). Although Uniswap Labs did not disclose the precise details of the Wells notice, it asserted in a blog post that UNI was not a security and emphasized that its platform does not meet U.S. legal definitions of a securities exchange or broker.

Meanwhile, the regulatory landscape appears to be shifting. Michael Welsh and Joseph Watkins, lead SEC attorneys in the lawsuit against crypto platform DEBT Box, resigned on April 22 after a Bloomberg report revealed findings of "gross abuse" of power in the case. In March, federal Judge Robert J. Shelby penalized the SEC for making false statements and misrepresentations in its lawsuit.

Additionally, the Blockchain Association and the Crypto Freedom Alliance of Texas have initiated a lawsuit against the SEC in the Northern District of Texas. They are challenging the regulator's broad interpretation of the term "dealer" within the Securities Exchange Act of 1934, claiming that this expansion creates a vague and burdensome regulatory landscape for digital asset businesses.

Related: Ripple contests $2B SEC fine, says penalty shouldn’t exceed $10M

Ether’s on-chain and derivatives data tell a different story

On April 23, Ether's price rose above $3,200, supported by increased demand for Ethereum decentralized applications (DApps). According to DefiLlama, the network’s smart contract deposits, measured by the total value locked (TVL), reached their highest level since July 2022 at 30.2 million ETH on April 22, marking an 8% increase from the previous month.

Highlights of Ethereum's TVL growth include innovative platforms such as EigenLayer staking solution, the decentralized exchange Uniswap, automated yield provider Pendle, and Renzo, a liquid staking application. In contrast, the Tron blockchain's TVL saw a 5% decrease in TRX (TRX) terms over the past 30 days, with its largest DeFi application, JustLend, experiencing an 11% reduction in deposits.

To understand if professional traders flipped bearish after Ether’s price underperformance, one should use the ETH options 25% delta skew as a proxy. A skew metric rising above 7% indicates anticipations of a price drop, whereas a negative 7% skew typically reflects bullish sentiment.

The Ether options skew metric showed an increase between April 9 and April 18, suggesting that traders were becoming less risk-averse. However, this trend reversed on April 19 as ETH traded below $3,000. Current data reveal a balanced dynamic between call (buy) and put (sell) options, indicating a neutral market sentiment.

On-chain metrics for Ethereum and ETH derivatives demonstrate resilience, even though Ether’s price has recently struggled to maintain the $3,000 support level. Nevertheless, it seems premature to anticipate a bull run surpassing $3,500, given the subdued investor enthusiasm regarding the prospects for a U.S. spot Ethereum ETF approval.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.