TL;DR
- Ethereum rebounds 6% after hitting a $2,140 low, though it remains pressured by forced selling in derivatives and weak real demand.
- ETH risk reversals stay negative for June and July, with investors paying higher premiums for puts amid expectations of fresh volatility.
- Matrixport and QCP Capital agree that high leverage and growing institutional hedging limit any chance of a sustained recovery.
Ethereum (ETH) is going through an unstable phase following last week’s rally. According to a Matrixport report, the recent surge wasn’t driven by genuine demand but by speculative futures positions that capitalized on market volatility. This left ETH exposed to sharp corrections, like the 8%+ drop it suffered over the weekend.
The decline came after a surprise U.S. airstrike on Iranian nuclear sites, a development that triggered selloffs across major cryptocurrencies. Ethereum led those losses, exposing the fragility of a price recovery built more on leverage than on solid fundamentals.
After bottoming at $2,140, Ethereum bounced nearly 6%, reaching $2,292 per unit. Trading volume fell 20% but remained above $21 billion.
Leverage Keeps Ethereum Under Pressure
Matrixport warns that high leverage levels continue to weigh on Ethereum’s price. The firm observed that many traders kept long futures positions without solid backing from real demand. This created a scenario where any external shock or shift in derivatives markets could trigger rapid liquidations.
The options market reflects this same trend. Data from Amberdata shows that ETH 25-delta risk reversals — a metric comparing the cost of puts and calls — tilted in favor of downside hedging for June and July expiries. This indicates that investors are willing to pay extra for protection against further drops, signaling expectations of short-term volatility.
Investors Paying More to Protect Themselves
QCP Capital confirmed this in its latest market note, pointing out that institutional investors are actively hedging their spot positions against potential corrections. In both BTC and ETH, defensive strategies gained ground, replacing the speculative long positions that had dominated previous sessions.
The crypto market continues to react strongly to external events and derivatives market shifts. Ethereum remains caught in a dynamic where capital protection takes priority over chasing new highs, in an environment where price stability no longer depends on organic demand.
