Descending channel pattern and weak futures data continue to constrain Ethereum price
Despite bouncing from a 45-day low on April 30, Ether (ETH) price is still stuck in a descending channel and the subsequent 9% gain over the past four days was just enough to get the altcoin to test the pattern's $2,870 resistance.
Federal Reserve monetary policy continues to be a major influence on crypto prices and this week’s volatility is most likely connected to comments from the FOMC. On May 4, the United States Federal Reserve raised its benchmark overnight interest rate by half a percentage point, which is the biggest hike in 22 years. Although it was a widely expected and unanimous decision, the monetary authority said it would reduce its $9 trillion asset base starting in June.
Chairman Jeremy Powell explained that the Federal Reserve is determined to restore price stability even if that means hurting the economy with lower business investment and household spending. Powell also dismissed the importance of the gross domestic product decline over the first three months of 2022.
Even though Ether's price has corrected by 14% over the course of a month, the network's value locked in smart contracts (TVL) increased by 7% in 30 days to 25.2 million Ether, according to data from DefiLlama. For this reason, it is worth exploring if the price drop below $3,000 impacted derivatives traders' sentiment.
To understand whether the market has flipped bearish, traders must analyze the Ether futures contracts' premium, also known as the basis rate. Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.
One can gauge the market sentiment by measuring the expense gap between futures and the regular spot market.
To compensate for traders'
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