Ethereum (ETH) derivatives traders have reacted to the altcoin’s failure to hold the $3,500 level by increasing their short positions. This increase in bearish bets indicates that the majority of traders are expecting further declines in the price of ETH.
However, do other metrics align with this sentiment? This on-chain analysis explores whether these traders may be making the right call — or if the data points to a potential rebound.
Ethereum Shorts Outpace Longs Amid Profit-Taking
As of writing, the liquidation map reveals that Ethereum derivatives traders have opened short positions totaling $918 million since the cryptocurrency’s price drop yesterday.
In trading, going long or short represents the trader’s expectations for price movement. Opening a long position indicates that the trader believes the price will rise. Going short, on the other hand, indicates that they expect a decline.
Currently, the value of ETH long positions is estimated at around $218 million, highlighting that short positions have significantly outweighed the upside exposure of $700 million. However, it is important to note that if ETH price rises towards $3,700, most of these highly leveraged positions may face liquidation.
However, Glassnode data suggests that these traders may not face liquidation unless there is a significant rally. This is mainly due to the increase in realized profits, which indicates that traders have made profits by selling or transferring assets at a higher price.
As of press time, Ethereum realized profits have risen to $659.22 million, indicating that most short positions have benefited from the price action and may be less vulnerable to liquidation in the short term.
ETH Price Prediction: Bearish
Since November 16, Ethereum price has been trading inside an ascending channel. An ascending channel is a chart pattern consisting of two ascending trend lines, one drawn above the price (resistance) and the other below the price (support).
This pattern indicates that the price is moving up within a specific range. The support line shows where the price tends to bounce up, and the resistance line identifies where the price is facing selling pressure.
As shown below, Ethereum, at $3,314, has dropped below the support line. If the selling pressure intensifies, the cryptocurrency is likely to drop to $3,033.
However, Ethereum derivatives traders need to be careful. If the altcoin fails to break below $3,220, it may not happen. Instead, the value may rise to $3,547 and possibly even $4,000.
