Matrixport Cautions Ether’s Leverage-Driven Rally Could Unwind Amid Market Volatility
Ether’s recent surge may be on unstable footing, with analysts warning that the rally has been fueled more by leveraged speculation than by fundamental strength.
In a report on Monday, crypto services firm Matrixport highlighted that “leveraged traders have driven ETH prices higher despite a lack of significant underlying demand,” leaving the asset vulnerable to sharp reversals—like the one that rattled markets over the weekend.
On Saturday, Ether slumped more than 8%, leading losses among major cryptocurrencies after U.S. airstrikes on Iran’s nuclear facilities sparked global market jitters and a spike in volatility.
Matrixport pointed to the sell-off as evidence of how heavily leveraged positions can magnify downside risks, suggesting that sustained high leverage levels could weigh further on ETH prices.
At last check, Ether was changing hands near $2,248, having pulled back from highs above $2,400 earlier in the week. Meanwhile, derivatives data shows traders are bracing for potential further declines.
Signals from the options market are adding to the cautious tone. Over the weekend, CoinDesk analyst Omkar Godbole reported that ETH’s 25-delta risk reversals—a measure comparing the cost of downside protection to upside bets—have turned negative for June and July expiries. This shift indicates traders are paying a premium to hedge against potential price drops.
QCP Capital echoed this caution, noting that “risk reversals in both BTC and ETH continue to show a bias for downside protection,” as long holders actively hedge their spot positions amid lingering market uncertainty.
