April 25, 2024

Ethereum Shorts Build-Up. Increase Hit Supply of Ethereum Exchange

Correction to Recover

While there is an ongoing crash that the general crypto market is yet to recover from, the second-largest crypto asset in the world, Ethereum, has gone into a major phase of correction. Following the fall that occurred last week, the price of Ethereum has been revolving around the level of just $2,000.

Santiment, a provider of on-chain data, has given some insight into what might become the next price action for the Ethereum token. Sentiment, the data expert, revealed that while observing the 8-hour chart, there had been the building up of some heavy shorts for Ethereum at $2,000.

However, the platform made a note to add that this kind of development does not usually end well for the shorter. Worse still, a short squeeze might follow immediately after. Therefore, the market might witness a rebound in the price of Ethereum very soon.

Yet, another factor that triggers a lot of concern is the supply of ETH in exchanges. Santiment said that while the market witnessed a slight drop in the total amount of ETH supply on exchanges in the course of the past year, they have now increased. It said that the 1st of May 2022 witnessed a large increase in the supply as people panicked to abandon their positions as a reflection of the price.

Therefore, any more increase in the supply on exchanges might cause more drop in price. This indicates that investors are currently in a condition of panic where they might have absolutely given up. Even though the situation might look a bit scary and warrant caution, it could be the best time to start building up new positions.

A Few Positive Indicators Around Ethereum

Santiment mentioned the 90-day “Market Value to Realized Value” ratio for the price of Ethereum. It was stated that the Market Value to Realized Value is a measurement of the profits or loss in the mid-term for holders, and it is currently indicating that the market is almost at the opportunity zone. Historically, it had witnessed a local bottom that was developed having a decent R/R.

On the other hand, the momentum of the crypto market would still be largely influenced by the global macroeconomic dynamics. While there is high inflation, the stock market in the United States, as well as the S&P 500 futures, are giving signs of weakness with the promise of the Federal Reserve to implement a more aggressive monetary policy.

Nevertheless, concerns that the United States would go into an economic recession are very high. All hands have been on deck to fight off the escalating inflation.

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