Key Insights:
- Short sellers caught off-guard as ETH price blasts past short term resistance.
- Whale sell order cluster reveals bearish bias.
- Ethereum’s estimated liquidity ratio signals rising derivatives appeal.
Ethereum (ETH) price has reclaimed the $2,300 price for the first time since early February. The Ethereum-native cryptocurrency has finally pushed out of the consolidation zone, but this outcome has also resulted in casualties.
ETH price pulled off a streak of green candles last week, as demand made a comeback while the bears moved to the bleachers. The coin kicked off this week with even more bullish momentum on Monday, during which it pulled off an 8% uptick.
The bullish ETH price momentum on Monday pushed as high as $2,386, retesting price levels last seen at the start of February. Why was this important? This was the same month where price achieved multi-month lows while also consolidating, a sign of seller exhaustion.
The Ethereum-native coin was not yet overbought despite the recent uptick. However, it was notably over-extended on the RSI compared to its RSI-based moving average.
The big question now is whether the cryptocurrency will maintain the same bullish momentum or capitulate. The rally triggered yet another noteworthy liquidation event.
According to Coinglass, Ethereum short liquidations pushed as high as $106 million in the last 24 hours. It also highlighted a widening gap compared to long liquidations, which amounted to $33.5 million during the same trading session.
Will ETH Price Maintain The Bullish Momentum?
The current ETH price bullish activity reflects bullish activity across the board as observed with multiple cryptocurrencies. However, there are multiple ways that this could go.
For example, supply-demand characteristics will determine whether it will maintain the uptrend in the next few days. If subsequent demand fails to maintain pace, then the Ethereum-native crypto may face another profit-taking event.
On the other hand, ETH price may be in a short-term cup and handle pattern. If this continues to play out, then chances are it will carry the same momentum in the next few days. In this case, the next resistance level will be just above $3,000.
Beyond speculative patterns, the current demand dynamics may help determine which outcome is likely. An aggressive run-up would likely be characterized by robust institutional and whale demand.
Institutional inflows kicked off the week in favor of the bulls, but inflows were quite low at $35.9 million on Monday.
Whale Activity Fails To Justify Aggressive ETH Price Uptrend
During a sharp recovery, whale activity tends to collaborate across the spot and derivatives segment. This means spot inflows surge and whales execute long positions.
Current data does not support that theory. Whale net spot inflows amounted to $10 million across Binance and OKX spot segments, while Coinbase spot registered $3.4 million in net outflows.
Not exactly the kind of flows one expects during an aggressive rally. Furthermore, whales executed large short positions, indicating that they anticipated a retracement. Total net short positions totaled $5.98 billion.
Such large short positions often occur when whales anticipate short-term sell pressure. This could be because the latest rally may encourage the rest of the market to buy aggressively due to FOMO.
If a retracement is on the cards, then liquidations will likely shift aggressively, affecting long positions this time. Moreover, whale activity also revealed that there were a lot of cumulative sell orders positioned near the $2,300 price level.
The Ethereum liquidation map revealed that shorts were more at risk of being liquidated compared to longs. Interestingly, a recent CryptoQuant analysis revealed that the Ethereum (ETH) estimated leverage ratio registered an uptick.
The rising ELR may point to more confidence among investors and higher leverage appetite but also highlight higher liquidations ahead. It will be interesting to see how things will unfold during the rest of the week.