Key takeaways:
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ETH futures premium shows traders are staying cautious and avoiding heavy leverage even as banking stocks rebound from recent credit concerns.
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Ether whale activity near $3,700 suggests limited bearish conviction, though confidence in a swift recovery toward $4,500 remains subdued.
Ether (ETH) dropped 9.5% on Friday, retesting the $3,700 level and triggering $232 million in leveraged long liquidations within 48 hours. The unexpected correction came amid a broader risk-off move fueled by credit concerns after two US regional banks announced write-offs on bad loans.
Ether derivatives data shows moderate unease among bullish traders, but whale positioning suggests most are not expecting a deeper decline. The key question now is whether the $3,700 support will hold as macroeconomic risks intensify.
Ether options’ 25-delta skew surged to 14% on Thursday, a level rarely sustained and often linked to periods of heightened fear. Traders are paying a premium for put (sell) options, signaling that market makers remain uneasy about downside risks. Under normal market conditions, the skew typically fluctuates between -6% and +6%.
The S&P Regional Banks Select Industry Index recovered part of Thursday’s losses, trading 1.5% higher on Friday. However, credit concerns have left marks on larger financial institutions such as JP Morgan (JPM) and Jefferies Financial Group (JEF), both of which reported losses tied to the automotive sector. According to Yahoo Finance, auto lending has shown the fastest growth among US banking segments.
Joachim Nagel, president of Germany’s Bundesbank and a member of the ECB’s governing council, warned of possible “spillovers” from the private credit market, calling it a “regulatory risk.” Nagel shared his concerns with CNBC as the global private credit market surpassed $1 trillion, adding that “we as regulators, we have to take a close look at it.”
The ETH monthly futures premium compared to spot markets slipped to 4%, below the 5% neutral threshold. Traders’ sentiment had already been shaken by the flash crash on Oct. 10, and the last notable bullish phase was in early February. Ether traders appear increasingly doubtful about the strength of any lasting bullish momentum.
US-China trade tensions deepen, but ETH whales are not bearish
Part of traders’ unease comes from the deteriorating relationship between the US and China, as the ongoing trade war enters a new phase involving export controls on rare earths and sanctions against a South Korean shipping company. US President Donald Trump said on Oct. 10 that the US could respond with an additional 100% tariff on Chinese goods starting Nov. 1.
To determine whether Ether whales are truly betting on further downside or simply hedging amid worsening macroeconomic conditions, it is useful to examine top traders’ positioning on derivatives exchanges. This metric combines data from futures, margin, and spot markets, offering a clearer view of short-term sentiment.
Top traders at Binance reduced their bullish bets (longs) Tuesday to Thursday but later reversed course, increasing their exposure to ETH despite ongoing price weakness. In contrast, top traders at OKX attempted to time the market by adding exposure near the $3,900 level but eventually exited as prices fell to $3,700 on Friday.
Related: How to catch market manipulation in altcoins before they crash
ETH derivatives markets show no alarming signs — quite the opposite. Bulls’ hesitation to take on leveraged positions appears healthy, particularly after the Oct. 10 extreme volatility. However, Ether’s path toward $4,500 will likely depend on clearer signals from credit conditions and US labor market data, meaning any recovery could take time.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
