ETH Shows Signs Of Seller Exhaustion, Can Bulls Capitalize?

Ethereum native coin ETH’s price was quite bearish in Q1 to the extent that its underperformance has almost become a meme.

However, there is some good news for ETH buyers because sell pressure appeared to be running out of steam.

Net taker volume data revealed that ETH experienced a surge in sell pressure in December. Heavy profit-taking after its impressive bullish performance in Q4 2024.

The data also revealed that ETH sell pressure has been declining in the last 4 months. Net taker volume has since dipped to low levels last seen in June 2024.

Why is this important? Well, it underscores a key observation in ETH price dynamics. Declining sell pressure signals that seller exhaustion is taking place.

Weak hands were pushed out of the market, leaving long term holders. It also means bullish momentum may have an easier time pushing prices higher.

Interestingly, some market observations signal that demand could be making a comeback especially in the derivatives segment.

Over $120 Million Worth of Flows Into The Derivatives Market

Recent market findings revealed that more than $77,000 ETH was observed flowing into the derivatives segment. This was the largest ETH derivatives inflows observed in the last 2 months.

According to an analysis conducted by CryptoQuant analyst Amr Taha, previous similar spikes in ETH derivative inflows observed in the last 6 weeks were quickly followed by extended ETH price decline.

The analyst also noted that the development occurred in the backdrop of aggressive retaliatory tariffs from China. Could these findings underscore another liquidation event for ETH?

ETH has been experiencing heavy liquidations over the last few weeks. Leveraged long positions in particular were severely impacted as price maintained an overall downward trajectory.

Will heavy liquidations still be on the cards this time especially as sell pressure cools down? Appetite for leverage declined since the end of March 2025, as evident by the dip in the estimated leverage ratio.

Nevertheless, the level of leverage remained significantly elevated especially compared to Q4 2024.

Although appetite for leverage was at a 2-week low, open interest remained within the lowest levels observed in November 2024.

In other words, low open interest combined with declining sell pressure, reflects more on the current market sentiment.

ETH Risks Capitulation as Negative Funding Rates Surge

There was a noteworthy shift from positive to negative funding rates in the last 3 days.

This may indicate that short traders have been executing positions in anticipation of more downside.

Another wave of sell pressure means ETH could lose some, if not all of the gains that it secured last week.

On the other hand, bullish strength means more upside for ETH price and such a scenario could lead to a surge in short liquidations.

Bitcoin has been showing weakness in the last 3 days as price struggled to regain more upside.

Meanwhile, there was a noteworthy spike spot flows since 8 April. For context, ETH inflows amounted to $36.25 million.

The spot inflows surge in the last 2 weeks could indicate that there was some noteworthy accumulation as sell pressure cooled off.

However, weak demand may explain why the bulls were not able to achieve a strong recovery.

The above analysis reflects some bearish observations in the market. For example, exchange flows declined especially compared to the first week of April.

More importantly, exchange inflows were still more elevated compared to outflows.

The higher exchange inflows compared to outflows reflect the high levels of uncertainty, as well as surge in negative funding rates.

This suggests a higher probability of a bearish move and hence ETH price could potentially push lower in the coming days.

Based on the above observations, it was clear that ETH bulls were having a hard time finding a strong footing.

Sell pressure may remain dominant a while longer, but seller exhaustion could limit the potential downside.