The Ethereum market has experienced a 15% drop in leverage over two days. Around 375,000 ETH has been withdrawn from derivative exchanges, indicating diminished speculative interest.
Market Dynamics in Derivatives
Ethereum has seen a 15% drop in the Estimated Leverage Ratio over two days, indicating a reduction in market leverage. Despite recovering from a five-month low of $2,160 to $2,760, this response may be temporary. Liquidations in the Ethereum market have resulted in a significant decrease in open positions, leading to a fall in leverage from 0.64 to 0.54 — its lowest in six weeks. Open interest dropped to $22 billion, marking the lowest level since late November.
Withdrawal from Derivative Exchanges
The past three days have seen the withdrawal of 375,000 ETH from derivative exchanges, pointing to decreased speculative activity. This trend has coincided with increased inflows to spot exchanges, suggesting that traders are closing leveraged positions and selling Ethereum in the spot market. This could cause downward pressure on Ethereum due to increased selling activity but also indicates reduced liquidation risk.
Technical Aspects and Prospects
Ethereum has formed a bearish crossover on its one-day chart, suggesting the strengthening of the downward trend. However, the Chaikin Money Flow remains in bullish territory, indicating strong buying pressure. For Ethereum to overcome this bearish pressure, it needs to breach resistance at the 200-day Simple Moving Average ($2,973). Another significant resistance level is at the 50-day Simple Moving Average ($3,304), with a breakout potentially triggering strong bullish sentiment.
The reduction in leverage and withdrawal from derivative exchanges suggest decreased speculative activity in the Ethereum market. However, technical indicators point to possible sentiment shifts if key resistance levels are breached.
