Key Takeaways:
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The ETH futures premium shows that traders remain cautious and avoid heavy leverage whilst bank stocks get well from recent credit worries.
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Ether whale activity near $3,700 suggests limited bearish belief, although confidence in a fast recovery towards $4,500 stays muted.
Ether (ETH) fell 9.5% on Friday, retesting $3,700 and triggering $232 million in leveraged long liquidations in 48 hours. The unexpected correction got here amid broader risk aversion fueled by credit worries after two U.S. regional banks announced writedowns on bad loans.
Ether derivatives data shows moderate concern amongst bullish traders, but whale positioning suggests most don’t expect a deeper decline. The key query now is whether or not $3,700 support will hold as macroeconomic risks increase.
ETH 30-day options delta skew (put call) at Deribit. Source: laevitas.ch
Ether options' 25-delta skew rose to 14% on Thursday, a worth rarely held and infrequently related to periods of heightened fear. Traders are paying a premium for put (sell) options, suggesting market makers remain concerned about downside risks. Under normal market conditions, the skew typically varies between -6% and +6%.
The S&P Regional Banks Select Industry Index recouped a few of Thursday's losses to trade 1.5% higher on Friday. However, credit concerns have left their mark on larger financial institutions comparable to JP Morgan (JPM) and Jefferies Financial Group (JEF), each of which reported losses related to the auto sector. According to Yahoo Finance, auto lending is experiencing the fastest growth amongst U.S. banking segments.
Joachim Nagel, President of the Deutsche Bundesbank and member of the ECB Governing Council, warned of possible “spillover effects” from the private credit market and called it a “regulatory risk”. Nagel told CNBC of his concerns as the worldwide personal loan market surpassed $1 trillion, adding: “We as regulators must take a detailed take a look at this.”
The monthly ETH futures premium in comparison with spot markets fell to 4%, below the neutral threshold of 5%. Trader sentiment had already been shaken by the flash crash on October 10, and the last significant upside occurred in early February. Ether traders look like increasingly doubting the strength of sustained upward momentum.
US-China trade tensions are heating up, but ETH whales should not bearish
Part of traders' unease stems from deteriorating U.S.-China relations as the continuing trade war enters a brand new phase that features export controls on rare earths and sanctions against a South Korean shipping company. US President Donald Trump said on October 10 that the US could respond with an extra 100% tariff on Chinese goods starting November 1.
To determine whether Ether whales are truly betting on further downside or are simply hedging within the face of deteriorating macroeconomic conditions, it is useful to look at the positioning of top traders on derivatives exchanges. This metric combines data from futures, margin and spot markets, providing a clearer view of short-term sentiment.
Top traders on Binance reduced their bullish bets (longs) Tuesday through Thursday, but later reversed course and increased their exposure to ETH despite continued price weakness. In contrast, top traders at OKX attempted to time the market by increasing their exposure near the $3,900 level but eventually exited as prices fell to $3,700 on Friday.
The ETH derivatives markets should not showing any alarming signs – quite the alternative. Bulls’ hesitancy to take leveraged positions seems healthy, especially after the intense volatility of October tenth. However, Ether's path towards $4,500 will likely rely on clearer signals from credit conditions and US jobs data, meaning a recovery could take a while.
This article is for general information purposes and will not be intended to constitute, and mustn’t be construed as, legal or investment advice. The views, thoughts and opinions expressed herein are those of the creator alone and don’t necessarily reflect the views and opinions of Cointelegraph.
