Key Indicators Signal Potential Distribution and Deeper Correction
- •ETH/USD sell volume surges as buying dries up, signaling distribution ahead of a deeper correction.
- •Influential trader Crypto Tony watches $3050; a clean break opens an accelerated drop to the $2800–$2600 zone.
- •Weak bull participation and hedge-short positioning point to growing downside conviction.
Ethereum ($ETH) is flashing early warning signs of renewed bearish momentum, and veteran trader Crypto Tony has put the market on red alert. In a December 3 update, Tony highlighted a stark imbalance on the ETH/USD perpetual futures chart: aggressive sell volume is climbing sharply while bullish volume remains conspicuously weak. “Sell volume is picking up while bull volume is weak. Keeping an eye on more weakness to hedge short upon losing $3050,” he wrote, attaching a volume-profile chart that shows distribution candles dwarfing any meaningful buying support.
As of writing, ETH trades at $3082, down 3.8% over the past 24 hours and struggling to hold the psychologically critical $3100 level. The recent bounce from sub-$2900 lows has lost steam exactly at the 0.618 Fibonacci retracement of the November decline, a classic spot for distribution before the next leg lower. Open interest has started declining alongside price — a textbook sign of long liquidation rather than fresh short entry, further confirming fading bullish conviction.
On-Chain Data and Technical Levels Support Bearish Outlook
On-chain data supports the bearish tilt. Exchange inflows spiked 18% this week, staking withdrawals remain elevated post-Shanghai unlock remnants, and the 30-day MVRV sits at -11%, indicating the average holder is underwater and more likely to sell rallies than accumulate. Meanwhile, funding rates have flipped modestly negative across major exchanges, giving shorts a small but growing tailwind. The $3050 trigger aligns perfectly with the confluence of the 200-period EMA on the 4H chart and the lower boundary of the multi-month ascending channel that has guided ETH since Q2 2025. A decisive close below opens the measured move toward $2800 (prior range lows) and potentially $2600 if macro risk-off accelerates.
Trader Sentiment and Implications
For traders, the message is clear: respect the distribution. Bulls need a swift reclaim of $3200 and rising buy volume to invalidate the bearish thesis. Until then, the path of least resistance remains lower — and Crypto Tony isn’t the only one loading the hedge book.