The bullish ETH traders found themselves in an uncomfortable position when Ethereum’s value failed to maintain its brief surge above $2,000 on May 6.

In the weeks following May 6, the price of Ether has held steady, oscillating in the relatively tight bracket between $1,820 and $1,950. Analysis of the current futures and options data for Ether (ETH $1,879), hints at a probable slide below the $1,820 support mark, primarily because professional market participants seem reluctant to initiate neutral-to-bullish positions via derivatives contracts.

Interestingly, the boom in Ethereum network activity, sparked by the wave of interest around memecoins, has not been enough to solidify investors’ faith. As per the data from BitInfoCharts, the average Ethereum transaction fee reached an annual peak of $27.70 on May 6, with the desire for Pepe (PEPE) and similar memecoins fuelling the surge, as noted by Cointelegraph.

In addition, the heightened gas fees have acted as a catalyst, prompting users to consider layer-2 solutions. This shift could potentially be seen as a weak spot, as it can lead to a reduction in the total value locked by pulling deposits from the Ethereum chain, a significant concern for decentralized finance applications.

Some observers suggest that ETH’s struggle to sustain above $2,000 could be tied to the Ethereum Foundation’s decision to offload $30 million Ether. This significant transaction saw nearly 20,000 ETH moving to the Kraken cryptocurrency exchange. The last substantial transfer by the foundation was witnessed in November 2021, when ETH’s price hit around $4,850, followed by a sharp 80% decline.

On a broader economic scale, the announcement of the U.S. April consumer price index (CPI) data, recorded at 4.9% on May 10 and slightly below the consensus, has reinforced investor expectations for stable interest rates leading into the Federal Reserve’s June meeting. The FedWatch Tool from CME Group indicates a strong 94% probability of stability in the current 5% to 5.25% range.

Barring any unexpected shift in Federal Reserve policy, high-risk assets such as cryptocurrencies could face ongoing pressure. However, if the perception grows that Ether is more likely to break its three-week stagnation to the downside, this concern would likely be evident in the ETH futures contract premium and the increased cost of protective put options.

Whales and arbitrage desks often favor Ether’s quarterly futures, but these fixed-month contracts usually come with a slight premium relative to spot markets. This suggests sellers prefer a delay in settlement. Ideally, ETH futures contracts in robust markets should trade at an annualized premium of 5% to 10%, a scenario referred to as contango, common in various financial markets.

Despite this, Ether traders demonstrated exceptional caution in the past week. There was no discernible surge in demand for leverage longs during the rally above $2,000 on May 6. The current 1.4% ETH futures premium suggests a notable lack of buying interest from derivatives contract participants.

To better understand investor sentiment after the recent correction, options markets analysis is beneficial. The 25% call-to-put delta skew can be informative, as it indicates whether arbitrage desks and market makers are demanding a premium for risk protection.

A negative skew below 7% would suggest an anticipated Ether price drop, while optimistic periods usually display a positive 7% skew. As it stands, the ETH options’ 25% call-to-put delta skew has remained neutral over the past fortnight, indicating that protective put options are being priced fairly compared to similar neutral-to-bullish call options.

Taking into account the 10.6% rally from May 2-6, the current Ether options and futures markets suggest a lack of confidence among professional traders. Consequently, a breach to the downside in the three-week sideways movement is more likely to trigger a bearish flip in weak derivatives indicators.

To sum up, if Ether’s price breaks the $1,820 support, we should anticipate a stronger inclination towards bearish bets via ETH derivatives, signaling a lack of trust and a decrease in demand for longs.