• ETH liquidations indicate a bullish bias among investors, with an increase in leveraged trades following the volatility and demand slowdown since early February.
• A CryptoQuant analysis looked into the potential for the Ethereum futures market being overheated due to the uptick in leveraged trades.
• ETH traders rapidly exited their leveraged long positions as the price dropped and open interest metric confirmed a lack of bullish demand, while weighted sentiment demonstrated a lack of enthusiasm about another rally.
Ethereum Liquidations Suggest Bullish Bias Among Investors
ETH’s latest liquidations indicate a bullish bias among investors despite the king alt’s fall in demand and sell press pressure. A contrast to its performance in January, but recent observations suggest an increased risk of liquidations that may bring about a surge in volatility.
Analysis Reveals Potential For Ethereum Futures Market Overheating
A CryptoQuant analysis looked into the potential for the Ethereum futures market being overheated based on observed surge in demand for leverage among futures market participants. The uptick reflects lower demand in the market, hence lower enthusiasm in price action.
ETH Traders Rapidly Exit Leveraged Long Positions
ETH traders rapidly exited their leveraged long positions as the price dropped since 2 March. This may suggest bearish momentum leading to an increase in short positions but likely outcome was a drop in demand for leverage due to uncertainty at current range after surge in long liquidations. Open interest metric confirms this, courtesy of its drop in first few days of March.
Weighted Sentiment Demonstrates Lack Of Enthusiasm About Rally Prospects
ETH’s weighted sentiment also demonstrated a lack of enthusiasm, especially about prospects of another rally. This may explain absence of stronger demand for leverage as market looked for footing.
Conclusion
In conclusion, ETH’s latest liquidations indicate increasing risk of longs or shorts liquidations which could bring about a surge in volatility amid low bullish enthusiasm from traders and investors alike; however further analysis is required to determine if such scenario will actually take place soon.