Table of Contents
ToggleStable ETF capital flow and increased ETH reserves by enterprises could be the driving force helping ETH excel and first challenge the $5,000 mark. In the past month, ETH has increased by 41%, but derivative market data shows traders remain cautious rather than overly optimistic. Despite institutional capital flow and enterprise-held ETH reflecting strong demand, economic recession risks continue to cast a shadow over price prospects.
Ethereum (ETH) surged to $4,349 on Monday, its highest level since December 2021. Although it has outperformed the overall cryptocurrency market by over 30% in the past 30 days, derivative product data indicates ETH traders have not yet returned to strong buying momentum. This raises doubts about ETH's ability to quickly conquer the $5,000 mark in the short term.
ETH has increased by 41% in the past month, while the total cryptocurrency market capitalization has only increased by 9%. With this outperformance, risk hedging demand increases as traders take profits and shift to other opportunities. Therefore, the lack of enthusiasm for leveraged long positions above $4,000 is not surprising.
Under normal market conditions, monthly futures contracts typically trade with insurance fees of 5% to 10% compared to spot prices to compensate for longer settlement periods. However, even as ETH approaches its six-month high, these insurance fees remain below the threshold indicating clear optimism.
The absence of this excitement signal is somewhat concerning, especially as Ether index ETFs have attracted $683 million in net capital flow in just two days, from Thursday to Friday.
ETH Options Reflect Neutral Sentiment Despite Strong Price Increase
The ETH options market provides important signals to assess whether traders have missed the price surge and are waiting for a better opportunity, or if they expect prices to correct below the $4,000 mark.
In a price decline scenario, the option delta spread would exceed the neutral threshold of 6%, reflecting put options being priced higher due to increased risk hedging demand. Conversely, when the market is overly optimistic, this index will drop below -6%, indicating call options are prioritized with higher insurance fees.
Currently, the ETH option delta spread is at -3%, reflecting a neutral market sentiment. This index has significantly improved compared to August 2nd, when it temporarily shifted to a negative attitude after ETH dropped 13%.
In summary, professional traders are currently neither overly optimistic nor expecting ETH to return to test the $4,000 mark. This change is partly explained by strong institutional ETH holding demand. BitMine Immersion (BMNR) reported on Monday that they added 317,126 ETH to corporate reserves, valued at approximately $1.35 billion at current prices. Meanwhile, Sharplink Gaming (SBET) announced raising nearly $900 million to expand its ETH reserve strategy.
The company currently holds about 600,000 ETH on its balance sheet, valued at over $2.55 billion at today's prices.
Economic Recession Risk – The Biggest Threat to ETH's $5,000 Target
ETH's neutral derivative indicators provide a positive signal, especially since most traders did not anticipate the significant price increase from $3,400 to $4,300 in just 8 days.
If ETH maintains above the $4,000 mark for a sufficiently long time, traders are likely to increase their confidence and open more buy positions, thereby creating momentum for price movement towards the $5,000 zone.
Macroeconomic conditions and overall risk tolerance remain major barriers to further price increases. Some investors are concerned that US import tariffs could hinder global economic growth. However, the anticipated meeting between Russian President Vladimir Putin and US President Donald Trump has somewhat eased geopolitical tensions, at least in the short term. If capital flow from spot ETFs continues and enterprises remain active in raising capital to expand ETH reserves, ETH will be well-positioned to outperform the rest of the cryptocurrency market.
This article is for informational purposes only and should not be considered as legal or investment advice.
