Ethereum (ETH) holders are in a state of limbo after the latest price reverted to $3,000 price for the first time since early November.
As a result, this dip has undone almost all the gains achieved in Q4 2024. This bearish performance has the market shook and nowhere is that more evident than in the ETH derivatives segment.
ETH derivatives net flows on exchanges have reportedly experienced another major outflow by almost 60,000 ETH.
The recent outflows have occurred barely 2 days after an almost similar amount of ETH was pulled from the derivatives market on exchanges.
According to CryptoQuant analyst, this outcome could potentially indicate a medium term bullish sentiment for Ethereum price or signal the closure of large positions due to sell pressure.
The latter is likely the reason considering the extreme appetite for leverage that has been playing out over the past few months.
The recent downside shock resulted in a massive liquidation event. Appetite for leverage was at multi-year highs judging by the estimated leverage ratio.
Meanwhile, long liquidations on 3 February surged to levels last seen in July 2022.
Why ETH Derivatives Traders are Uncertain About Ethereum Price
Derivatives traders usually oscillate between bullish and bearish sentiment. Except when the market tends to offer a lot of uncertainty.
ETH’s latest crash saw price almost slide below $2,000. However, it experienced a substantial buy back, with price bouncing back above $2,700.
However, the last 2 days have demonstrated a lack of bullish follow-through, with both spot and derivative flows remaining negative.
Over $400 million worth of outflows were observed in the spot market within the last 2 days
This remained negative in the derivatives segment which recorded a dip in options volumes by 37.56% in the last 24 hours.
These observations confirmed that demand was still weak and that a high prospect that Ethereum (ETH) price could potentially drop lower.
But is ETH sentiment really shifting to bullish in the medium term? The lack of urgency to take advantage of the latest downside could indicate concern that prices could dip lower.
In other words, there has not been definitive demand to demonstrate a clear sign of short term bullish price action.
Speaking of, ETH was still not oversold despite the latest wave of sell pressure. Never the less, it did drop to a support level that has stood strong for over 12 months.
Sliding below the aforementioned support could trigger more FUD and potentially result in price sliding below $2,000 for the first time since November 2023.
Meanwhile, spot ETF flows remained positive in the last 4 consecutive trading days. This confirms that institutions still find ETH attractive especially at its latest discounts.
As for Ethereum price prospects, the leverage shakedown may pave the way for more organic demand to play out. Nevertheless, that remains to be seen as investors wait for things to cool down.
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