Middle East geopolitical tensions have caused market participants to become less active.
Ethereum (ETH) held steady around $2,500 in the early Asian session on Thursday following mixed activity across its on-chain data.
Ethereum is experiencing calmness in its on-chain metrics following an extended period of price consolidation that has spanned the past six days after dropping from above $2,700.
US spot Ethereum exchange-traded funds (ETFs) have seen considerable drops in inflows, registering just $32 million in net inflows over the past two days, according to SoSoValue data. This is in contrast to last week when it saw over $170 million in the first two days of trading.
Exchange net flows have also been largely mixed, with a combination of inflows and outflows over the past week, indicating a struggle for direction among market participants. A similar picture is evident in Ethereum futures, where open interest has remained flat in the past six days.
The calm in the market follows the US Federal Reserve’s decision to hold rates steady at 4.25-4.50% on Wednesday amid ongoing concerns about US tariffs and a resumption of Middle East war tensions.
“Markets are increasingly focused on a potential realignment in Middle Eastern power structures and the implications this may have for regional geopolitics as the US, Russia and China are all involved by proxy,” said QCP analysts in a note to investors on Wednesday.
“Tehran is cornered, a disruption or full blockade of this critical chokepoint becomes a credible tail risk. The strait accounts for a significant share of global crude oil flows, and any supply shock would have a pronounced inflationary impact,” they added.
As a result, investors are employing risk-off strategies to hedge against downside risk, while others remain muted. On Deribit, the largest options exchange, investors have bought an increased amount of puts around the $2,450 to $2,500 strike price over the past 24 hours, making this level a critical point of volatility in the coming days, according to data from Amberdata.
Put options are contracts that give the buyer the right but not the obligation to sell an underlying asset at a specific price (strike price) before the contract expires. It represents a downside price prediction. When prices move below a puts’ strike price, the contract becomes “in the money” or in profit.
“This geopolitical stress is layered atop an already fraught global macro environment, marked by stubbornly elevated inflation and a global reset in tariff regimes. The so-called Tariff War may have fizzled with little fanfare, but investor attention has swiftly migrated to the Middle East,” the analyst said.
Ethereum experienced $64.61 million in futures liquidations, with long and short liquidations totaling $35.61 million and $29 million, respectively, over the past 24 hours, according to Coinglass data.
Ethereum continued consolidating on Wednesday, holding the $2,450 support at the 38.2% Fibonacci Retracement. If ETH could cross above the 50-day Exponential Moving Average (EMA), it could quickly rise to test the $2,850 resistance. To overcome the $2,850 key resistance, ETH needs a surge in volume accompanied by strong bullish sentiments.
On the downside, a move below the 38.2% Fibonacci level and the lower boundary of a key channel could send ETH toward the $2,260-$2,110 range.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) are below their neutral levels and moving sideways, indicating a dominant bearish momentum.
