Key Insights
- •ETH’s cumulative short squeeze leverage highlights $2.25 billion max pain above $4,000.
- •Ethereum whales make a strong comeback with almost $10 billion in long positions lining up in the last 24 hours.
- •ETH ETF flows send mixed signals as ETH price forms a bullish flag.
Ethereum price briefly managed to push above $4,000 earlier this week, but that effort was short-lived, paving the way for capitulation. Closer investigation into the cryptocurrency’s demand dynamics revealed weak whale activity, but that might be changing. Ethereum price demonstrated weak demand ever since the crash in the first half of the month. Weak whale activity has historically been characterized by short-lived rally attempts. This was the case with the Ethereum price this past weekend after what seemed to be another rally attempt. However, the market demonstrated low demand from the whale cohort, and ETH price consequently dipped below $3,800. This price suppression might be setting up Ethereum shorts for liquidation. Liquidation data on Coinglass revealed that there was roughly $2.51 billion worth of cumulative short liquidation leverage at risk if ETH pushes back above $4,000.
For context, ETH price traded at $3,787 at press time, and had a cumulative long liquidation leverage of just over $1 billion at $3,700. This meant that there were more downside expectations at risk of liquidation than long positions.
Ethereum Price Readies for a Surprise Uptrend Aided by Rising Whale Demand
Whales were on the sidelines for the last week or so, since mid-October. This explained why rally attempts were short-lived, followed by pullbacks. That appeared to be changing in the last 24 hours, with whale demand making a robust comeback. ETH large order book data revealed that whales executed over $8 billion worth of net long positions in the derivatives segment in the last 24 hours. This was across OKX and Binance futures, which happen to be two top exchanges with the highest futures volumes.
Whales also executed spot buys worth $89 million across Binance, OKX, and Coinbase. Despite whales buying, the market still demonstrated overall outflows. For example, Ethereum crypto had $266 million worth of net spot outflows in the last 24 hours, which was much more than the spot liquidity injection from whales. Moreover, the bearish market conditions reflected the bearish sentiment in the market. The fear and greed sentiment was still in extreme fear territory, which may explain the sell pressure. However, whale order books painted a different picture, signaling that a tide of buying pressure might be building up. This was also supported by another noteworthy observation offering more clarity over smart money activity.
Will Ethereum ETFs Support a Bullish Outcome as Price Extends Bullish Flag?
While rising bullish expectations may flash bullish signals, a bullish outcome will require support from the institutional cohort. The Ethereum ETFs registered $444.8 million in net outflows after mostly experiencing outflows in the first half of the week. Except for Tuesday, during which they registered $141.7 million worth of inflows. The weak inflows compared to outflows in the first half of the week highlighted weak confidence in the upside among Ethereum ETFs. An alignment consisting of demand from both whales and institutions may highlight the return of strong demand. Whales buying back at the recently discounted prices may not necessarily guarantee a pivot, but it could signal that one might be close.
Moreover, the Ethereum price action pullbacks since late August formed a bullish flag.
The bull flag may also signal a bullish outcome ahead. However, such an outcome requires sell pressure to cool down or a strong demand wave to make an aggressive comeback. On the macro scale, the markets have been waiting for a major catalyst to trigger a sentiment shift, and most analysts have their sight set on rate cuts.