Ethereum Slightly Recovers, but Institutional Hedging Soars, Analysts Say

Ethereum fell as much as 11% in the past 24 hours, falling below $2,380, before recovering slightly by 4%, according to data from The Block’s Price Page. The sudden drop has raised concerns about Ethereum’s medium-term trajectory, especially among institutional investors.

Thomas Erdösi, Product Manager at CF Benchmarks, noted that institutional demand for downside protection in Ethereum options has increased significantly. “There is a significant increase in downside hedge interest in Ethereum, as shown by the weekly change in CME ETH options open interest from February 18 to February 24, ahead of the March expiry,” Erdösi said.

Erdösi also highlighted that the $2,000 level is being closely watched, with a sharp increase in open interest at this price level reflecting increased caution among investors. At the same time, the shift away from call options as far as $7,000 suggests that the market is reducing expectations for a major breakout. “Overall, market participants are scaling back their Ethereum bearish positions around the $2,000 level,” Erdösi added.

Risk of Liquidation from Leveraged Buys

Adding to the negative sentiment, on-chain data from Biget Wallet CEO Alvin Kan shows that three significant MakerDAO positions are at risk of liquidation if Ethereum continues to fall to $1,926, $1,842, and $1,793.

“With approximately $340 million potentially liquidated from MakerDAO, the recent Ethereum sell-off has put leveraged buys at risk,” Kan told The Block. He also pointed out that $296 million has been wiped off Ethereum positions, signaling that forced selling has begun, and if liquidations continue, the downward pressure will intensify.

Kan warned that if Ethereum continues to weaken, the liquidations will create a chain reaction, forcing investors to exit their positions. “However, it is not all negative – if buying pressure increases or liquidity stabilizes, the market could see a strong reversal,” Kan said. “The next moves will depend on how leverage is handled and whether spot demand can absorb the shock.”