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Ethereum (ETH) derivatives traders responded to the altcoin’s failure to maintain $3,500 by increasing short positions. This increase in bearish bets shows that the majority of traders are expecting the price of ETH to continue falling.
However, do other indicators agree with this sentiment? This Blockchain analysis looks at whether these traders are making the right decisions — or whether the data hints at a potential recovery.
Ethereum Shorts Outperform Longs Amid Profit Taking
As of now, the liquidation map shows that Ethereum derivatives traders have opened short positions totaling $918 million since the cryptocurrency price crashed yesterday.
In trading, going long or short represents the trader’s price expectations. Opening a long position shows that the trader believes that the price will increase. Meanwhile, short selling shows they are expecting a decline.
Currently, ETH long positions are valued at around $218 million, suggesting that short positions have outstripped buying action by $700 million. However, it should be noted that if Ethereum price recovers to $3,700, most of these positions with high leverage could face liquidation.
However, data from Glassnode suggests that these traders may not face liquidation unless a significant recovery occurs. This was mainly due to an increase in realized returns, suggesting that traders were taking profits by selling or transferring assets at higher prices.
Year-to-date, Ethereum’s realized profits have increased to $659.22 million, suggesting that the majority of short positions have taken advantage of the price volatility and may be less vulnerable to the short-term liquidation.
ETH Price Forecast: Downtrend
Since November 16, ETH price has been trading within a rising channel. An ascending channel is a chart pattern formed by two rising resistance levels, one above the price (resistance) and one below (support).
This pattern shows that the price is moving higher within a defined range. Support lines show where prices tend to bounce, and resistance lines mark where prices face selling pressure.
As seen below, ETH at $3,314 has fallen below the support line. If selling pressure increases, the cryptocurrency’s value could fall to $3,033.
However, Ethereum derivatives traders need to pay close attention. If the altcoin does not fall below $3,220, this may not happen. On the contrary, the value could increase to 3,547 USD and potentially climb to 4,000 USD.
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