Retail Ether Longs Surge to 94% Amid Mixed Market Signals

Key Highlights:

Retail investors have increased their long positions on Ether to a staggering 94%, a figure that often signals a potential market reversal.
The funding rate for ETH on Binance remains steady, with moderate leverage rather than euphoric trading.
BitMine has added over 300,000 ETH to their reserves this week.

Ether (ETH) continues to hover below the significant $4,000 level, facing challenges in gaining upward momentum after the flash crash on Friday. The altcoin is currently trading within the boundaries of its 50, 100, and 200-day exponential moving averages (EMAs), showing the ongoing conflict between short-term and long-term market trends.

ETH one-day chart. Source: Cointelegraph/TradingView

Retail Ether Longs Outweigh Futures Market, Raising Concerns

Despite the uncertain technical indicators, retail traders seem optimistic about further gains. Recent data from Hyblock Capital reveals that the long percentage held by retail Ether accounts has entered the 90th percentile, one of the highest recordings among key cryptocurrencies. Hyblock remarked:

“True Retail Accounts Long% is getting high among quite a few coins, noting percentile readings of 94% for Bitcoin, 90% for Ether, and 86% for Solana.”

This observation suggests a significant inverse correlation, as retail long positioning’s price correlation stands at -0.86 for ETH, indicating that elevated retail long positions may signal an imminent reversal in the market.

True retail long % on Binance for BTC, ETH, SOL, and HYPE. Source: Hyblock Capital/X

By hitting the 90th percentile, the retail sentiment appears overly optimistic regarding price increases. Historically, such extreme positioning can serve as a contrarian signal, indicating potential profit-taking or liquidations by retail traders.

In discussing the derivatives market, analyst Pelin Ay provided a detailed analysis:

“Current funding levels of 0.01%–0.03% reflect a healthy mid-phase uptrend, significantly below the overheated 0.1%–0.2% levels seen in 2021. Moderate leverage and rising spot demand could lead to a rally toward the $4,500–$5,000 range.”

However, a sudden rise in funding above 0.05% could indicate market overcrowding of long positions, resulting in a short-term drop.

Ether funding rate on Binance. Source: CryptoQuant

Institutions Capitalize on the Ether Dip

Significant ETH holders are seizing the opportunity to buy amid recent price fluctuations. Data indicates that BitMine, under the leadership of Tom Lee, acquired 104,336 ETH valued at approximately $417 million last Thursday. This purchase follows their previous acquisition of over 202,000 ETH, resulting in a total reserve valued at $9.3 billion. Despite current market volatility, Lee remains confident, reiterating his year-end target for ETH at $10,000, bolstered by increasing institutional demand.

Bitmine ETH reserve. Source: Strategicethreserve.xyz

This article does not provide investment advice. Every financial action carries risks, and readers are encouraged to perform their own due diligence before making investment decisions.