Are ETH’s leveraged long position liquidations suppressing its potential upside

Ethereum [ETH]’s worth motion might have delivered a slight upside to this point because the finish of August. Its worth motion appears much less excited than anticipated particularly now that the Merge is lower than two weeks away. Is it due to lack of sufficient shopping for stress or is there one thing extra to this efficiency?

Secrets and techniques unveiled

ETH’s prevailing narrative for the previous few week has been centered on the Merge. As is usually the case, a rally is predicted within the weeks or days previous to a serious improve after which buyers promote the information. The Merge is now lower than two weeks away and ETH’s worth has been touching bearish territories.

One potential cause for ETH’s subdued worth is the liquidation of leveraged lengthy positions. It registered sturdy demand in August, particularly within the first half of the month, earlier than a large pullback. ETH’s leveraged ratio registered a pointy uptick within the first half of August, adopted by a large pullback. This confirms that using leverage as worth began to choose.

Supply: CryptoQuant

The subsequent main leverage ratio improve occurred in in direction of the top of the month, but it surely has since then declined. A drop within the Ethereum funding charges proceeded every leverage ratio pullback. This final result is per ETH’s bearish days throughout the month.

ETH’s efficiency on 19 August was among the many greatest examples of an occasion the place leveraged lengthy liquidations subdued the worth motion. The worth had cooled down after briefly getting into overbought territory in direction of mid-August and leveraged merchants began growing their positions.

Supply: Glassnode

The market registered its largest ETH leveraged lengthy liquidations on 19 August and this created a robust wave of promote stress. An identical incident occurred on 26 August the place longs elevated adopted by one other main spike within the longs liquidations.

Merchants merchants on the alt

One notable commentary is that there was diversion between ETH’s funding charges and estimated leveraged ratio. Equally, the futures open curiosity and futures lengthy liquidations metrics demonstrated divergence.

Merchants ought to thus contemplate observing the aforementioned metrics to find out wholesome entry or exit factors. Different market forces have additionally been at play in curbing ETH’s potential upside however lengthy liquidations have clearly performed a component.