Key Takeaways
Ethereum’s breakout above $3,700 triggered major liquidations, but spot selling, fading sentiment, and bearish futures positioning suggest the rally may lack sustainability and could face a near-term correction.
Ethereum’s [ETH] sharp breakout above $3,700 resulted in over $160 million in short liquidations on Binance.
This followed a similar $195 million wipeout around the $3,500 level, reflecting aggressive forced buybacks in a high-leverage environment.
Such liquidation-driven rallies tend to lack sustainability, as they are not fueled by organic spot demand. While the price surge caught bears off guard, the underlying volatility increases the risk of a swift correction.
Thus, unless supported by strong buying activity, Ethereum could lose steam and retrace if broader market conditions fail to reinforce this rally.
Whales accumulate short-term, but is long-term distribution still a threat?
Large holder behavior paints a mixed picture. According to IntoTheBlock, Ethereum’s 7-day Netflow surged by 171.75%, at press time. hinting at renewed short-term accumulation.
However, the broader 90-day view remained bearish, with Netflows down by -2512.17%, indicating persistent long-term distribution.
This divergence shows that while some whales are stepping in, the broader trend still leans negative.
Therefore, the current rally may face headwinds if broader selling resumes. Sustained upward momentum will likely require a structural shift in long-term accumulation patterns, something that has yet to fully materialize based on on-chain data.
Are sellers still in control of the spot market?
Spot market dynamics reflect sell-side pressure despite Ethereum’s recent price jump. The 90-day Spot Taker CVD indicated a Taker Sell Dominant behavior, confirming that sell orders continue to outpace buys.
This trend suggests that traders are using higher prices to exit positions rather than accumulate. Therefore, while price action may appear bullish on the surface, the rally lacks conviction from spot participants.
If selling dominance persists across exchanges, Ethereum could experience a slowdown or pullback, particularly if speculative interest wanes and fails to translate into meaningful spot demand.
Did market sentiment already peak during the squeeze?
Ethereum’s crowd sentiment appears to have cooled post-breakout. According to Santiment, Weighted Sentiment stood at +1.48, while Social Dominance was at 10.47%, as of writing.
Although these values remain positive, they are notably lower than prior peaks, signaling reduced enthusiasm.
The drop implies a transition from euphoria to caution, especially after short liquidations drove most of the upside.
Therefore, if excitement continues to fade without fresh narratives or catalysts, Ethereum’s upward momentum may weaken.
Traders could hesitate to re-enter aggressively, reducing bullish pressure and opening the door for potential price consolidation or downside.
Has the derivatives market flipped bearish again?
The derivatives market shows signs of bearish recalibration following Ethereum’s rally. At the time of writing, the Long/Short Ratio was at 0.96, with 51.01% of positions short and only 48.99% long.
This indicates that traders have tilted toward downside expectations, potentially anticipating a reversal after the short squeeze.
The rising short positioning also suggests that many are willing to bet against further gains at current levels.
Therefore, if selling pressure aligns with bearish sentiment in futures markets, Ethereum could face increased volatility, particularly if bulls lose momentum and fail to defend recently reclaimed price zones.
Will Ethereum maintain its gains or give in to pressure?
While Ethereum’s surge past $3,700 triggered massive liquidations, underlying metrics paint a cautionary picture.
From a bearish Long/Short Ratio to continued spot selling and fading sentiment, the rally lacks firm footing.
Unless sentiment improves and whale behavior shifts back toward accumulation, Ethereum may struggle to maintain its gains, making a short-term correction increasingly likely.
