The recent sharp drop in the price of Ethereum has sparked a wave of speculation among investors, casting doubt on whether the bearish trend will continue.
However, new data from the futures market points to a possible reversal, driven by significant changes in long liquidations on exchanges. data CryptoQuant covers a major liquidation in the Ethereum futures market, reaching levels not seen since November 2022.
These liquidations measure the forced unwinding of long perpetual positions due to the price decline that has recently triggered a cascade of liquidations across exchanges. This development could indicate a cooling period in the futures market as many leveraged positions have been cleared.
CryptoQuant analyst Shayan emphasized that such a dump can usually stabilize the market, paving the way for renewed investor interest. The potential for a bullish surge increases if demand returns, as a dump in the futures market often attracts new buyers.
Historical context
Historically, Ethereum price drops have often caused significant spikes in long liquidations. For example, in January, a price drop resulted in more than $50 million in liquidations, followed by a quick recovery.
Similarly, when Ethereum’s price dropped below $3,200 in March, liquidations exceeded $120 million, contributing to a significant market drop before the market recovered. More recently, in August, the chart shows a sharp spike in liquidations of over $160 million as Ethereum’s price fell to $2,100.
In fact, as leveraged traders ran out of the market in the wake of the latest price drop, spot buying pressure is taking over, as evidenced by the fact that ETH has since recovered to $2,700.
Is there any interest in shopping?
Key technical indicators suggest that the Ethereum market may be stabilizing, with potential for a bullish reversal. In particular, the demand index, currently slightly below zero at -0.1, is showing signs of leveling off and a slight upward move. This suggests that selling pressure may be easing and buying interest is starting to rebound.
Additionally, the Accumulation/Distribution indicator is trending higher, with a current value of 11.519 million. This steady accumulation suggests that investors are consistently buying Ethereum, which could be a precursor to a significant price move. As strong hands accumulate the asset, the likelihood of a future price surge increases.
Withdrawals from staking contradict optimistic sentiments
In contrast to these potentially bullish indicators, on-chain data paints a more worrying picture. Ethereum saw sharp increase in staking withdrawals: this week alone, over 122,000 ETH was withdrawn from staking pools.
This is the highest level of withdrawals since May, which is about $521 million. The surge in withdrawals signals increasing selling pressure as investors unstake their Ethereum, potentially liquidating their holdings. This additional supply in the market could put downward pressure on the price of Ethereum, especially if demand remains weak.
