Ether (ETH) continued its retreat on Tuesday, slipping beneath $4,000 for the first time since its all-time high set just 32 days ago. Analysis of the token's derivatives reveals a varied picture of what will happen next.
Investors Weigh Mixed Signals from Futures & Options as ETH Breaches $4,000
25 September 2025 - 12:22 CEST
Ether's 19% retracement from its $4,954 peak follows a 100% rally from 1 July, fueled by expectations of US Federal Reserve rate cuts when markets were pricing in over a 90% probability. The Fed has since delivered a 25 basis point cut, while Chair Jerome Powell warned against moving “too aggressively” and leaving inflation unfinished, signaling a more cautious stance going forward. That's tempered some of the aggressive easing bets that fueled the summer rally and continued to position the US central bank's activities as a key driver of financial markets across multiple asset classes.
The broader crypto market has cooled in parallel. The Alt Season Index peaked at 77 and is now rolling over, meaning most altcoins are underperforming Bitcoin on a 90-day basis – levels we have flagged as caution signals when macro and PMI backdrops are unsupportive.
On-chain signals show moderation. Monthly active addresses have slipped 9% from 12.96mn in late August to 11.81mn, while whale addresses holding more than 0.1% of supply have fallen to 91, the lowest since 2018 and a sign that the largest holders are actively de-risking.
Derivatives markets highlight shifting sentiment. Coinmetrics data shows perpetual funding rates are now 0.5%, a steep decline from the double-digit levels seen during the ATH surge, indicating leveraged longs have been pared back but not reversed into net short positioning. Futures open interest has contracted by roughly 15%, from $40.9bn in August to $34.4bn, showing reduced leverage participation.
Options markets remain more constructive: the put/call ratio on Deribit stands at 0.61, with concentrated open call interest at $5k ($556mn), $6k ($513mn), and $7k ($339mn) for 31 Oct and 26 Dec expiries, signaling traders continue to position for year-end upside. Realized 30-day volatility has compressed to 0.49, reflecting declining realized swings even as price tests a critical support zone.
Overall, the $4,000 level is pivotal. Sustained support here, coupled with stable funding and strong call positioning, could enable a rebound toward $4,500. Conversely, a decisive break lower, reinforced by continued whale distribution and weakening network demand, would increase the risk of a move toward $3,500.
