- Options skew changed heavily toward puts as traders hedged near the $4,000 mark.
- ETH liquidations totaled $275M in 24 hours, with Bybit accounting for nearly $200M.
- Ethereum ETFs saw $108M in net inflows, with BlackRock adding 32,367 ETH holdings.
Ethereum slipped below $4,000 momentarily yesterday, leading to broad liquidations and bearish positioning in derivatives markets. According to an X post, the decline broke through multiple technical supports and changed sentiment across options trading. The move came alongside $1.7 billion in total market liquidations, with ETH leading the downside.
Options Outlook
Adam noted that implied volatility for ETH options was steady despite the sharp decline. However, the skew changed decisively toward puts, with prices for downside protection surpassing call premiums. This showed growing concern about further weakness, as traders increasingly hedged exposure.
He added that options trading volumes did not rise significantly, but market makers entered gamma-sensitive positions. Some participants resorted to purchasing puts to manage risk, particularly around the $4,000 level. Adam warned that a break of this level could lead to bearish repricing of options.
Liquidations and Exchange Outflows Intensify
The correction coincided with major liquidations across derivatives platforms. Data from Coinalyze showed ETH liquidations totaling $275.5 million in 24 hours, with Bybit absorbing nearly $200 million of the losses. Binance followed with about $50 million, while OKX recorded approximately $25 million.
According to Coinglass, exchange flows between September 20 and 23 confirmed strong selling pressure. Outflows accelerated from September 21, when ETH fell from around $4,400 to nearly $4,200. Persistent negative netflows, ranging from -$50 million to -$100 million, indicated forced selling and panic-driven exits.
CryptoRank reported that the broader market dropped 4% in the same period, with ETH down by 6% and Bitcoin falling about 3%. The Fear and Greed Index dropped to 45, indicating growing caution.
Technical Weakness and Long-Term Outlook
Ethereum faces resistance near $4,500–$4,600, where it has repeatedly faced rejection through September. At the time of writing, ETH was trading at $4,184, down 2.10% on the day. The Accumulation/Distribution line flattened at 29.3 million, suggesting profit-taking by larger holders.
The MVRV Z-Score is at 29.36, indicating elevated valuation levels compared to the realized price. Such readings have preceded local tops historically, leaving ETH vulnerable to deeper corrections.
A drop below $4,000 could lead to support around $3,700-$3,800, however recovery above $4,400 would reestablish bullish momentum. Despite immediate pressures, some traders positioned for a potential Q4 rebound.
Adam had previously noted strategies involving selling short-term puts, particularly around the $3,900 level. This allowed the market to finance long-dated call options and prepare for renewed upside once volatility subsides.
Related: Ethereum Stablecoin Supply Hits $168B as Price Gains Strength
On the ETF front, Lookonchain reported that Ethereum ETFs recorded net inflows of 25,795 ETH, equal to $108.47 million, on September 22. BlackRock led with 32,367 ETH in daily inflows, boosting its holdings to 3.83 million ETH valued at $16.12 billion.
Meanwhile, Ethereum’s slide below $4,000 exposed weaknesses across derivatives, spot flows, and technical levels. Options markets changed heavily toward puts, while liquidations and exchange outflows led to downside pressure. However, ETF inflows and longer-term positioning strategies indicated that, despite short-term risks, traders are preparing for potential recovery into the final quarter of 2025.
