Key Insights:

• Large traders are increasing their long positions in Ether derivatives, as sentiment shows signs of stabilization amid broader market decline.
• Companies holding significant ETH reserves are trading at discounts, reflecting a lack of investor confidence in an imminent recovery.

Ether (ETH) experienced a sharp drop of 15% from Wednesday to Friday, slumping to $2,625, its lowest level since July. This decline has erased $460 million in leveraged bullish positions in just two days, marking a 47% decrease from the all-time high on August 24.

Despite a lack of demand from ETH bulls in the derivatives market, signs of a possible relief rally to $3,200 are beginning to emerge.

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

The annualized funding rate for ETH perpetual futures settled around 6% on Friday, up from 4% the week prior. Typically, this indicator vacillates between 6% and 12% to accommodate capital costs and suggests some emerging resilience in ETH futures, even amid increasing macroeconomic uncertainty.

Rising Economic Pressures

A recent survey conducted by the University of Michigan revealed that 69% of consumers anticipate rising unemployment within the next year, a marked increase from previous data. “Cost-of-living concerns and income worries dominate consumer views of the economy across the country,” stated Joanne Hsu, the survey director.

During an earnings call on Tuesday, Home Depot’s CEO, Ted Decker, mentioned that the firm is witnessing a decrease in engagement with larger discretionary projects due to ongoing vulnerabilities in the housing market. He noted that housing turnover relative to the total available supply has reached a 40-year low, while home prices have started to decline according to Yahoo Finance.

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

Part of the waning confidence among Ether traders is attributed to nine consecutive sessions of net outflows from spot Ether ETFs, amounting to roughly $1.33 billion. This trend has been led by institutional investors scaling back their exposure to risk assets. Meanwhile, the US dollar has strengthened against major currencies amid concerns regarding the AI sector.

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

The DXY has surged to its highest level in six months, suggesting that investors are prioritizing cash holdings. This behavior may seem counterintuitive given the US economy’s dependence on tech, but traders are opting to hold off until there’s clearer visibility on employment data and whether consumer demand will pick up after the prolonged US government shutdown.

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

Top traders at OKX have increased their long positions despite Ether dropping to $2,700 from $3,200 over the weekend. Confidence appears to be reestablishing thanks to strong quarterly earnings and year-end guidance from Nvidia (NVDA US), as well as Federal Reserve Bank of New York President John Williams suggesting potential interest rate cuts soon as the labor market shows signs of weakness.

Related: BitMine announces 2026 ETH staking plans as market melts down

The current bear market has severely impacted firms with significant ETH reservoirs amassed through debt and equity financing, including BitMine Immersion (BMNR US) and ShapeLink Gaming (SBET US). Their stocks are assessing discounts upward of 16% relative to their ETH assets, indicating ongoing investor unease.

From a derivatives perspective, major traders and market participants reasonably believe that $2,650 represents a support level. Yet, the overall bullish sentiment will likely depend on increased inflows into spot Ether ETFs and clearer indications of a less stringent monetary framework, suggesting that Ether’s march back to $3,200 could take several weeks.