Ethereum: Retail traders bet against ETH—Will it see a short squeeze?

• Ethereum’s retail short position rising as longs decline amid rising OI signaled retail investors are bearish.
• Binance is dumping massive amounts of ETH and other cryptos despite the MACD confirming a bullish crossover.

The percentage of retail short positions for Ethereum [ETH] has been rising, while that of long positions is declining. The Short Ratio has climbed above 30%, while the Long Ratio has dropped below 75%.

This shift is accompanied by increasing Open Interest (OI), suggesting retail investors are betting against Ethereum.

As of press time, ETH’s price has risen above $2,775, but if this bearish sentiment prevails, a pullback toward $2,700 is possible.

Conversely, if OI continues rising while shorts get squeezed, ETH could break past $2,825 and aim for higher levels. As the long positions decrease, this could signify apprehension about Ethereum’s near-term growth potential.

Source: X

If this trend continues, ETH could test lower support levels. Conversely, if the market sentiment shifts and long positions begin to increase, we might observe a rebound towards $2800 or higher.

Binance continues to massively offload ETH

The sentiment of retail investors aligns with Binance, which has been transferring significant amounts of Ethereum to centralized exchange bridges and market makers. The amounts range from 1.003K ETH worth $2.79M to 1.52K ETH worth $4.25M.

This high level of activity, including large inflows to market makers and exchanges, may indicate that Binance is facilitating liquidity or possibly reducing its holdings in response to market conditions.

The potential implications for Ethereum’s price are mixed.

Source: Arkham

On one hand, if these transfers are intended to meet increasing demand on exchanges or for market-making purposes, it could stabilize or even increase the ETH price due to higher liquidity and trading volume.

If this is Binance liquidating its holdings, it could lead to a price drop due to increased supply on the market.

This means further sell-side pressure from exchanges could either confirm a bearish trend or, if met with sufficient buy-side demand, could lead to a bullish reversal.

MACD confirms a bullish crossover

However, Ethereum’s price action revealed a bullish signal, with the MACD crossing above its signal line.

This bullish crossover, combined with stabilization at the key support level around $2,650 after the Bybit hack, suggests potential for a price upswing.

The immediate target following this bullish signal could be the recent resistance at $3,000. If Ethereum breaks through this barrier, the next critical level could be around $4,000 and beyond.

Source: TradingView

Conversely, if the bullish momentum wanes and fails to sustain, ETH may retest the support at $2,650.

A break below this point could lead to further declines, with the next significant support at $2,490.