Ethereum ( ETH ) appears to be finding a bottom around $2,500, at least during the early Asia trading session on Thursday. The market has just undergone a recent correctionary period of price consolidation. This occurs amid a period of overall tumult and uncertainty, propelled by geopolitical strife and an evolving investor worldview. The cryptocurrency market is making some bold headlines these days. It has to contend with volatile exchange flows, open interest trending sideways, and a recent increase in the activity of options trading.
Futures Market Activity
Ethereum also had a significant amount of action occur in its futures market over the last 24 hours, with $64.61 million in liquidations. Long liquidations made up $35.61 million of this amount, while short liquidations came to $29 million. This is a strong sign of a tug-of-war between bullish and bearish traders as they battle to take profits and cut losses during market volatility and uncertainty.
Last week started out with heavy futures trading volume, more than $170 million traded in just the first two days. This has not resulted in a consistent increase or decrease. In lieu of upward movement, Ethereum is instead stuck in a price rut.
Technical Analysis and Key Support Levels
Ethereum has been ranging on Wednesday, holding key support around $2,450 which happens to be the 38.2% Fibonacci Retracement level. This level has proved to be highly important for the cryptocurrency. It serves as a short-term floor during the asset’s highs and lows of entering the market.
This newfound tranquility in Ethereum’s on-chain metrics comes after a six-day helium-like consolidation period after the drop from levels above $2,700. Ethereum will require a massive increase in trading volume to escape this consolidation pattern. The strong bullish sentiment will need to continue if ETH is to push past important resistance at $2,850.
If buyers can’t hold support at 38.2% Fibonacci, there is potential for deeper downside. Should Ethereum lose this level, it might catalyze a breakdown from the lower end of an important channel. This decision could push Ethereum to the $2,260 – $2,110 area.
Options Market and Investor Sentiment
Investors on Deribit have made the move today! During the last 24 hours, they have been buying deep-in-the-money puts with strike prices mostly at $2,450 and $2,500. This indicates a fearfully bullish mood, as most are looking to hedge their bets and shield themselves from any major impacts from downside risks.
The $2,450-$2,500 strike price area is proving to be a pivotal zone of Ethereum volatility. Look for important shifts the next few days. In fact, most institutional investors are seen actively hedging their positions by continuously buying put options in this corridor. This move indicates they’re expecting even more price decreases.
Ethereum open interest hasn’t budged much over the last six days. This lack of movement shows us that traders don’t have a strong conviction on which way the market is heading. This is likely due to the continuing market uncertainty and existing consolidation trend.
ETF Inflows and Geopolitical Factors
US spot Ethereum exchange-traded funds (ETFs) have experienced a massive plunge in inflows. In the past two days, that’s all they managed to log—$32 million net inflows. This drop could be a sign of the overall risk-off attitude that investors have taken, driven by factors such as macroeconomic concerns and ongoing geopolitical conflicts.
They caution that geopolitical tension is only complicating a clearly fraught global economic underbelly. This national environment is coupled with continuing inflation and rapidly changing tariff policies.
"This geopolitical stress is layered atop an already fraught global macro environment, marked by stubbornly elevated inflation and a global reset in tariff regimes. The so-called Tariff War may have fizzled with little fanfare, but investor attention has swiftly migrated to the Middle East," - The analyst.
Even greater today is the concern over the possible disruption of key chokepoints in the Middle East, like the Hormuz Straits.
"Tehran is cornered, a disruption or full blockade of this critical chokepoint becomes a credible tail risk. The strait accounts for a significant share of global crude oil flows, and any supply shock would have a pronounced inflationary impact," - The analyst.
QCP’s analysts noted increased attention on possible changes to the region’s power structures. They painted a picture of how these developments might change regional geopolitics, with the world’s superpowers increasingly engaging.
"Markets are increasingly focused on a potential realignment in Middle Eastern power structures and the implications this may have for regional geopolitics as the US, Russia and China are all involved by proxy," - QCP analysts.
