Ethereum price extended its bearish momentum this week, with ETF contributing to the same. The price consequently pushed $4,000 for the first time in about 6 weeks.
This substantial decline also triggered one of the network’s highest weekly liquidations in recent history.
Ethereum price hovered at $3,909 at press time as bearish capitulation gave way to a massive fear-induced pullback. For context, ETH price had cooled down by about 12% since the start of the week.
The market previously anticipated more upside before this week’s bearish outcome. This was mostly because the FED’s rate cut confirmation created bullish expectations.
Consequently, ETH liquidations surged this week as Ethereum price went against the bullish expectations. More than 413 million worth of ETH liquidations occurred on Thursday (25 September).
Interestingly, that was the second-highest daily long liquidation event observed in the last 6 months.
The highest liquidation day occurred earlier in the week on 22 September, during which liquidated longs surged above $490 million.
In summary, more than $1 billion worth of ETH longs were liquidated just this week alone.
Ethereum ETF Contributed Significantly to Weekly Downside
Heavy spot outflows, especially from whales and institutions, underscored ETH’s weekly performance.
Coinglass spot flow data revealed that the cryptocurrency has maintained significant outflows since mid-September.
Ethereum spot ETFs also maintained an overall outflow trend during the week. They sold off just over $547 million worth of ETH since Monday.
The Ethereum ETF outflows this week further fueled the bearish momentum and revealed some interesting observations.
For example, the previously bullish sentiment presented an opportunity for whales and institutional players to secure some exit liquidity.
The market conditions may have thus allowed whales to hunt for leveraged long positions. Consequently, a long squeeze scenario played out, further extending ETH’s bearish price action.
The bearish price action may allow investors to jump back in at steeper discounts. But is the Ethereum price slated for a quick comeback?
Will Ethereum Price Extend its Decline Further?
ETH price was almost oversold at the time of observation. Sell pressure also cooled down at a price level that previously acted as a resistance zone.
However, the fact that it was not yet oversold also meant that it had more potential downside before retesting the next support zone near the $3,400 price level.
A look at large order book flows revealed that whales were not yet buying the dip. Whales sold a net of $65 million worth of ETH in the last 2 days in the spot market across Coinbase, Binance and OKX.
They also executed net short positions worth $275 million during the same period. A clear indicator that whales still leaned in favor of the bears.
This could signal that the ETH price may extend its downside well into the weekend. Futures data also revealed that positive funding rates were declining, likely due to the spike in long liquidations.
Futures open interest briefly dipped into negative but demonstrated a pivot back onto the positive side in the last 24 hours. Perhaps a sign of rising expectations that ETH price might pivot.
Key narratives also underscored the bearish market outcome, including ETH’s recent downside. For example, rising geopolitical tensions may have further eroded market sentiment.
It was also worth noting that the tariff wars have been escalating again this week.
This has been one of the major narratives influencing market sentiment this year, and it was not surprising that the market delivered an overall bearish weekly performance.