Key Takeaways:
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ETH derivatives positioning shows major traders increasing their long exposure as sentiment stabilizes despite continued weakness in broader risk markets.
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Public firms which have significant ETH reserves proceed to trade at discounts, suggesting that investors are still not convinced of a short-term recovery.
Ether (ETH) experienced a pointy 15% decline from Wednesday to Friday, falling to $2,625, its lowest level since July. The move worn out $460 million in leveraged bullish ETH positions in two days, extending the decline from the August 24 all-time high to 47%.
Demand from ETH bulls continues to be largely absent within the derivatives markets, although sentiment is slowly moving towards a possible recovery upswing to $3,200.
The annual funding rate of ETH Perpetual Futures. Source: laevitas.ch
The annual funding rate for ETH perpetual futures settled near 6% on Friday, rising from 4% the previous week. Under balanced conditions, the indicator typically fluctuates around 6% to 12% to cover the fee of capital. Even though ETH futures are still removed from an uptrend, they’ve shown some resilience despite increasing macroeconomic uncertainty.
US consumer and housing data point to increasing economic stress
A University of Michigan survey shows that 69% of consumers now expect unemployment to rise in the approaching yr, greater than double the number a yr ago. Joanne Hsu, the patron survey director, reportedly said: “Cost of living concerns and income concerns dominate consumers' views on the economy across the country.”
During an earnings call on Tuesday, Home Depot CEO Ted Decker said the corporate continues to “experience lower exposure to larger discretionary projects,” primarily as a consequence of continued weakness in the actual estate market. Decker said housing sales as a percentage of total available supply have approached a 40-year low, while home prices have begun to regulate, based on Yahoo Finance.
Part of Ether traders' waning confidence could be attributed to nine straight sessions of net outflows into spot Ether exchange-traded funds (ETFs). About $1.33 billion exited these products during this era, partly as institutional investors reduced their exposure to dangerous assets. The US dollar gained against major foreign currency echange as concerns about the bogus intelligence sector grew.
The US Dollar Index (DXY) climbed to its highest level in six months as investors sought the protection of money holdings. It could appear counterintuitive given how intertwined the US economy is with the tech sector, but traders are simply holding reserves until employment data becomes clearer and whether consumer demand will get better following the prolonged government shutdown within the US.
Top traders on OKX increased their long positions whilst Ether fell from $3,200 to $2,700 on Sunday. Confidence is beginning to improve after strong quarterly results and year-end guidance from Nvidia (NVDA US) and after Federal Reserve Bank of New York President John Williams said he sees room for rate cuts within the near term because the labor market weakens.
The cryptocurrency bear market has been particularly difficult for firms which have built up large ETH reserves through debt and equity issuances, comparable to BitMine Immersion (BMNR US) and ShapeLink Gaming (SBET US). These stocks are currently trading at discounts of 16% or more in comparison with their ETH holdings, highlighting investors' lack of security.
From a derivatives perspective, whales and market makers are increasingly convinced that $2,650 is the underside. Still, bullish belief likely hinges on renewed spot inflows from Ether ETFs and clearer signals of less restrictive monetary policy, meaning Ether's potential return to $3,200 could take a couple of weeks.
This article is for general information purposes and shouldn’t 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.
