The leveraged short positions of ethereum have hit a historical high, reflecting traders' readiness for increased volatility and a sharp shift in market sentiment.
Increased bearish bets on ethereum.
The open interest (OI) of ethereum futures has surpassed 20 billion USD, setting a new record, indicating a sharp increase in speculative activity. The increase in short positions indicates a growing confidence among traders in the bearish trend of ethereum. At the same time, the excessive leverage ratio (ELR) has reached a historical high, reflecting an increasing reliance on loans, which increases the possibility of rapid liquidation when prices move in the opposite direction.
Currently, there is a change in investment sentiment in the options market, with protective put options accounting for over 34% of total trading volume, while call and put options make up only 26%. Although the bearish sentiment has dropped from 70% since October to 47%, cautious sentiment remains high, reflecting investors' significant cautious attitude towards the recent value of ethereum.
ETH difficulty faces strong resistance.
technical indicatorsThis also indicates that Ethereum will face a tough battle. The resistance near $3,600 remains a difficult obstacle to overcome. RSI Indicating that the bullish momentum is weakening. Institutional interest in Ethereum also shows signs of cooling, with Ethereum ETF experiencing multiple large-scale net outflows in the past week.
The surge in leveraged short positions has added another layer of pressure to the market. If the price of Ethereum surges, shorts may face liquidation, leading to a series of emergency buy orders, potentially driving up prices and causing a 'short squeeze'. Conversely, if the market continues to weaken, put bets may be confirmed, albeit accompanied by escalating overall market tension.
Can Ethereum continue to rise?
Despite prevailing pessimism, there is still optimism about the possibility of positive changes in the last few months of this year. Ethereum's price may reach between $5,000 and $10,000 in the future, but these forecasts depend on significant changes in market conditions.
The Ethereum derivatives market, with its record short positions and leverage, is becoming a major challenge for risk investors. Traders need to exercise caution as the market is currently oscillating between being dominated by a bearish trend and the potential for a strong reversal. Whether this is a further sign of decline or a potential opportunity for recovery remains an unresolved question.
Ethereum has a strong momentum to shake off all the retail investors and long-term hodlers, mainly because Ethereum's valuation is too high, many people are bullish on it, there are no major bearish signals, so most people can only be shaken off through a long washing out process.
Most retail investors do not have a large amount of Bitcoin, but basically all of them have Ethereum.
Everyone wants higher excess returns and looks down on Bitcoin's "stable" returns, choosing what seems to be a more promising option between the large and small altcoins, which in turn makes the smaller altcoins more overvalued, resulting in the current situation.
All one can do is hold on, even if it means crying, having held for so long, already enduring a bear market cycle.Sunk cost.The stock price is too high. If switching positions now, it is very likely to fail before dawn.
