Ethereum experienced a sharp downturn, holding positions around $2,800. However, a decrease in derivatives flow may suggest a potential recovery.
Ethereum's Decline and Its Impact
On February 3, Ethereum saw a sharp decline, raising doubts about its ability to recover. This has left investors questioning the future potential of this cryptocurrency.
Potential Recovery through Derivatives
According to CryptoQuant, Ethereum's netflow on derivative exchanges dropped below -300,000 ETH. This may indicate reduced selling pressure and a healthier market, with conditions possibly leading to a short squeeze, potentially driving prices higher.
Signs of Interest in ETH
Despite recent struggles, buyer interest in ETH remains evident. Spot Ethereum ETFs and potential options on these funds highlight ongoing demand. Analysts suggest the $2,500 level could support a rebound.
The combination of decreased netflow and improved liquidity conditions presents a compelling case for a bullish outlook on Ethereum in the near term.
