Ether Rally May Unwind Amid High Leverage, Matrixport Cautions

Ether’s Leverage-Fueled Rally Faces Risks of Sharp Reversal, Matrixport Warns

Ether’s recent rally might be on fragile ground, as analysts caution that excessive leverage — rather than solid fundamentals — has been driving its upward price moves.

Matrixport, in a note published Monday, said leveraged traders have propelled ETH higher despite a lack of strong underlying demand. This leaves the asset exposed to sudden price drops, similar to the sharp sell-off witnessed over the weekend.

On Saturday, Ether tumbled more than 8%, leading declines across major cryptocurrencies after U.S. airstrikes on Iranian nuclear facilities rattled global markets and triggered a wave of volatility.

Matrixport highlighted the downturn as evidence of how quickly leveraged positions can exacerbate price swings, warning that persistently high leverage could keep adding pressure on ETH.

At the time of writing, Ether was trading near $2,248, down from highs above $2,400 reached last week. Meanwhile, derivatives markets indicate traders are positioning for more potential downside.

The options market is also flashing caution signals. Over the weekend, CoinDesk analyst Omkar Godbole noted that ETH’s 25-delta risk reversals — which measure the relative cost of downside protection versus upside bets — have shifted negative for June and July expirations. This suggests traders are increasingly willing to pay a premium to hedge against further declines.

Echoing this sentiment, QCP Capital reported that “risk reversals in both BTC and ETH continue to show a preference for downside protection,” with long holders actively hedging their spot positions to guard against further volatility.