Ether Price Hits Four-Month Low While Futures Data Suggests Potential Rebound

Key Points:

Large traders are increasing their long positions in ETH derivatives as sentiment stabilizes despite ongoing risks in broader markets.
Public companies holding significant ETH reserves are trading at reduced rates, indicating a lack of confidence in a short-term recovery.

Ether (ETH) experienced a dramatic 15% decline from Wednesday to Friday, settling at $2,625, the lowest it has been since July. This plunge resulted in the liquidation of $460 million in leveraged bullish positions in just two days, contributing to a total drop of 47% since the peak on August 24.

Although demand from ETH investors is generally lacking in the derivatives market, there are indications that sentiment is shifting toward a potential rebound to $3,200.

ETH perpetual futures annualized funding rate. Source: laevitas.ch

The annualized funding rate for ETH perpetual futures approached 6% on Friday, an increase from 4% in the preceding week. Typically, this figure varies between 6% and 12% in a balanced market to account for capital costs. While still not bullish, the ETH futures market has shown some resilience despite heightened macroeconomic uncertainty.

Economic Stress Signals from US Consumer and Housing Data

A survey conducted by the University of Michigan reveals that 69% of consumers anticipate an increase in unemployment within the next year—more than double the percentage from a year ago. Joanne Hsu, the director of the survey, mentioned, “Concerns regarding living expenses and income are affecting consumer opinions about the economy across the nation.”

In an earnings call on Tuesday, Home Depot’s CEO Ted Decker remarked that there is a noticeable decline in consumer engagement with larger discretionary projects, primarily due to ongoing instability in the housing market. Decker noted that the housing turnover as a fraction of total available supply has reached a 40-year low, leading to adjustments in home prices.

Spot Ethereum ETFs daily net outflows, USD. Source: Farside Investors

The waning confidence among Ether traders stems from nine consecutive sessions of net outflows in spot Ether exchange-traded funds (ETFs), with approximately $1.33 billion having departed from these products during this period, largely due to institutional investors minimizing their exposure to risk assets. The US dollar has strengthened against other major currencies amid rising concerns in the artificial intelligence sector.

US Dollar index (DXY). Source: TradingView / Cointelegraph

The US Dollar Index (DXY) has surged to its highest level in the last six months as investors opt for cash holdings. This situation may seem counterintuitive given the significant ties of the US economy to the technology sector, but traders are holding off to wait for clearer insights into employment data and consumer demand recovery following the prolonged US government shutdown.

ETH top traders’ long-to-short positions at OKX. Source: CoinGlass

Despite Ether’s drop to $2,700 from $3,200 on Sunday, leading traders at OKX have raised their long positions, reflecting a gradual improvement in confidence following strong quarterly earnings results and favorable year-end forecasts from Nvidia (NVDA US). Moreover, Federal Reserve Bank of New York President John Williams stated he anticipates possibilities for interest rate cuts as the labor market continues to weaken.

BitMine announces 2026 ETH staking plans as market melts down

The current bear market in cryptocurrency has posed significant challenges for companies like BitMine Immersion (BMNR US) and ShapeLink Gaming (SBET US), which accumulated large ETH reserves through leverage and equity issuance. Their stocks are currently trading at discounts of 16% or more compared to their ETH holdings, illustrating a lack of investor confidence.

While some market whales and makers seem to believe that the recent drop to $2,650 is the lowest point, sustained bullish sentiment will likely depend on incoming inflows into spot Ether ETFs and clearer signals of a more accommodating monetary policy. Hence, ETH’s potential bounce back to $3,200 may require a few weeks.