Ether’s recent rally may not be as strong as it appears. According to analysts, the price surge in Ethereum (ETH) is being driven primarily by speculative futures activity, not organic demand. This positioning makes the asset vulnerable to sharp declines, especially during periods of geopolitical tension.
Leverage, Not Demand, Fuels ETH Spike
Crypto financial services firm Matrixport warned that last week’s Ethereum price spike was largely due to leveraged futures positions. This rally, they argue, lacked real, fundamental support from spot buying or institutional flows.
“Leveraged traders have pushed ETH’s price higher in the absence of fundamental support,” Matrixport noted, calling it a fragile setup.
That fragility showed clearly over the weekend. Following the U.S. airstrike on Iran’s nuclear sites, Ether plunged over 8%, leading losses among top cryptocurrencies and demonstrating its sensitivity to geopolitical shocks.
Market Hedging Intensifies as ETH Falls Below $2,250
At the time of writing, ETH trades around $2,248, well below its recent peak of $2,400. This drop is accompanied by growing caution in the derivatives market.
Options data shows that traders are actively hedging against further downside. The 25-delta risk reversals — a metric comparing the cost of protective puts to bullish calls — have shifted negative for expiries in June and July.
This shift signals that investors are paying a premium to protect against potential ETH price drops.
Cautious Sentiment Persists
Singapore-based QCP Capital also echoed Matrixport’s concerns. In a weekend update, the firm said that risk reversals in both BTC and ETH reflect growing demand for downside protection. Traders are not exiting the market but are increasing hedges to reduce exposure.
“Long holders are actively hedging their spot exposure,” QCP reported, reflecting a lack of confidence in near-term bullish momentum.
Conclusion: Elevated Risks Ahead
While Ethereum’s recent price action may have looked bullish on the surface, analysts warn it is being propped up by leverage rather than long-term support. With the options market flashing warnings and macro uncertainty rising, traders may need to stay cautious.
Until stronger fundamentals return, ETH remains exposed to volatility — especially amid geopolitical or market shocks.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.