Ethereum markets are showing a split personality: options traders are buying protection while large institutions continue to pile into newly launched spot ETH ETFs. The contrast highlights a short-term caution among derivatives players against a backdrop of steady, longer-term institutional demand.
Derivatives data points to growing bearish positioning. Per Coinanlyze, perpetual open interest for Ethereum slipped by about 2% — from $24.6B to $24.1B since Sept. 1. Block Scholes’ head of research, Andrew Melville, notes a “large increase in open interest of puts since the end of August,” and says that rush to buy downside protection has pushed the cost of bearish bets higher than bullish ones.
That hedging is focused and time-bound. Derive’s Sean Dawson highlights concentrated put volume around the $3,600–$3,800 strikes for the Sept. 12 expiry — nearly 10% of volume in 48 hours — and clusters near the $4,000 and $5,000 strikes for Sept. 26, signalling traders are pricing in a near-term pullback followed by a more moderate correction by month’s end.
On-chain flows add another layer. Dune data shows Ethereum netflow fell to 183 ETH after a massive inflow of 348,236 ETH on Aug. 25, suggesting some investors unstaked or took profits after ETH’s Aug. 24 peak of $4,955. ETH is trading around $4,368 today (CoinGecko), roughly 12% below that high.
At the same time, institutional appetite remains robust. SoSoValue reports $3.87B in ETF inflows for August and an additional $1.08B in the last week — flows that outpace Bitcoin ETFs, which posted net outflows of $751.12M for August despite a weekly inflow of $440.71M.
What this means: the market looks split between short-term risk management (options hedges and unstaking) and longer-term allocation through ETFs. That mix can increase near-term volatility as protective positions may amplify downside moves, even while institutional buying underpins demand at higher timeframes.
Risk note: Options activity and ETF flows are informative but not definitive price signals. Traders use puts to hedge exposures, and institutional inflows reflect broader allocation decisions — both carry market risk and are not investment advice.
Source: Decrypt. Read the original coverage for full details.