Ether’s recovery potential is closely tied to improving U.S. credit and labor indicators. Traders have adopted a cautious stance following recent market turmoil regarding liquidations in derivatives.
Key Takeaways:
- ETH futures premium indicates traders are opting for caution with minimal leverage as banking stocks show recovery from earlier concerns.
- Activity from Ethereum whales hovering around the $3,700 mark suggests a lack of strong bearish sentiment, yet there’s diminished optimism for a quick bounce back towards $4,500.
Ether (ETH) saw a 9.5% dip last Friday, testing the $3,700 support, which led to $232 million in long liquidations in just 48 hours. This unexpected downturn coincided with a broader market sell-off induced by credit worries following two regional banks in the U.S. announcing write-offs on problematic loans.
ETH 30-day options delta skew (put-call) at Deribit. Source: laevitas.ch
Traders are currently paying a higher premium for put options, indicating unease about potential downward movements. Typically, the skew fluctuates between -6% and +6% under normal conditions, but it has surged to 14% recently.
The regional banks’ index showed signs of recovery, increasing by 1.5% on Friday, yet significant credit concerns linger around larger banks like JP Morgan and Jefferies Financial Group, which reported losses tied to the auto sector.
Joachim Nagel, president of Germany’s Bundesbank, raised alarms about potential spillovers from the private credit market, calling it a regulatory risk. As he expressed to CNBC, the global private credit market has already exceeded $1 trillion, necessitating careful regulatory scrutiny.
ETH’s monthly futures premium compared to spot markets dropped to 4%, below the neutral threshold of 5%. Traders have become increasingly hesitant about enduring bullish momentum following a significant sell-off on October 10.
US-China Trade Tensions Intensify
The uncertainty is compounded by deteriorating U.S.-China relations, with recent tariffs being discussed. President Donald Trump hinted at a potential 100% tariff on Chinese imports starting from November 1.
Despite ongoing price challenges, the movements of Ethereum whales on derivative markets suggest a mix of hedging and speculation amidst broader economic uncertainty. Top traders at derivatives exchanges. Source: CoinGlass
Traders on Binance have resumed their bullish positions after reducing exposure earlier in the week, while others at OKX attempted to capitalize on market fluctuations but faced losses.
As the landscape evolves, Ether’s journey towards reclaiming the $4,500 mark depends heavily on clearer indicators from the U.S. credit environment and labor market data, with a recovery expected to take time.
