Geopolitical instability historically prompts investors to move away from risky assets such as cryptocurrencies, favoring more stable investments as a safe haven. This shift often leads to sell-offs across risk asset classes, as witnessed in the recent market downturn. Traders were keen on ETH’s price dropping, as evident from the bearish skew of the risk reversal, likely driven by its use as a hedge.
This sentiment was validated by a technical indicator as ETH’s value declined by over 5% to $3100. Speculators with long positions in altcoins typically use ETH puts to safeguard against downturns, rendering ETH prices particularly sensitive to market sentiment shifts. The prevailing fear in the crypto markets was palpable and manifested in the negative swing of perpetual swap funding rates.
Furthermore, this anxiety impacted the forward curve, with the front end dropping below 10%, signaling a pessimistic short-term outlook for cryptocurrency prices.
