Ether retail longs metric hits 94%, but optimism could be a classic bull trap

Key takeaways:

• Retail traders hold 94% long positions on Ether, often a contrarian indicator.

• ETH funding on Binance remains healthy, with leverage moderate and not euphoric.

• BitMine continues accumulating with over 300,000 ETH added to the reserve this week.

Ether (ETH) continues to trade below the crucial $4,000 threshold, struggling to establish bullish directional momentum following last Friday’s flash crash. The altcoin consolidated between its 50, 100, and 200-day exponential moving averages (EMAs), a technical zone that highlighted the ongoing tug-of-war between short-term and long-term market trends.

ETH one-day chart. Source: Cointelegraph/TradingView

Retail ETH longs dominate the futures market, but carry a contrarian outlook

Despite the mixed technical setup, retail traders appeared to be betting aggressively on further upside. Data from trading resource Hyblock Capital outlined Ether’s True Retail Accounts (TRAs) long percentage has reached the 90th percentile, one of the highest levels across major crypto assets. Hyblock said,

Surprisingly, the firm added that retail long positioning is inversely correlated with price, at -0.86 for ETH, implying that as retail longs reach extreme highs, the likelihood of a reversal grows.

True retail long % on Binance for BTC, ETH, SOL, and HYPE. Source: Hyblock Capital/X

The 90th percentile for ETH longs suggested that retail sentiment is heavily skewed toward optimism (i.e., expecting prices to rise). Historically, extreme retail positioning, especially when it reaches outlier territory (e.g., 90th percentile), can act as a contrarian indicator.

This is because it may signal overcrowding in long positions, potentially leading to a reversal if retail traders start taking profits or getting liquidated.

Speaking on the derivatives market, crypto analyst Pelin Ay offered a more nuanced view of the market’s structure, noting that funding rates remain positive but restrained, signaling a market dominated by longs but not yet euphoric. 

Ay explained that current funding levels between 0.01%–0.03% indicated a healthy mid-phase uptrend, far below overheated bull-phase levels of 0.1%–0.2% seen in 2021. The analyst added that moderate leverage and improving spot demand could set the stage for a renewed rally toward $4,500–$5,000, while any sudden surge in funding above 0.05% could mark overcrowded longs and trigger short-term pullbacks.

Ether funding rate on Binance. Source: CryptoQuant

Related: 95% of corporate ETH buys happened in Q3 — start of Ether supercycle?

Institutional treasuries buy the Ether dip

Large-scale ETH holders are also taking advantage of the recent pullback. Data showed that BitMine Immersion Technologies, chaired by Tom Lee, accumulated 104,336 ETH worth around $417 million on Thursday. 

This added to BitMine’s earlier acquisition of over 202,000 ETH on Sunday, with the current market value of its ETH reserve coming at $9.3 billion. Despite recent volatility, Lee has reiterated his year-end target of $10,000 per ETH, supported by increasing institutional and spot market demand.

Bitmine ETH reserve. Source: Strategicethreserve.xyz

Related: Ethereum confirms bearish signal that last time led to ETH dropping 60%

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.