Ethereum Short Positions in Danger! 300,000 ETH Outflow and Liquidation Risk! - Coin Bulletin

CryptoQuant, an on-chain analytics platform, reported that the net flow of Ethereum on derivative exchanges has fallen below the -300,000 ETH level for the first time since August 2023.

This major breakthrough is interpreted as it could reduce the selling pressure on Ethereum in the market and have a positive impact on the price.

Withdrawing Ethereum from exchanges typically means that investors are moving their assets to cold wallets or closing leveraged positions. This can create a favorable environment for the price to rise as it reduces the supply of ETH in the market. If demand remains constant or increases, the downward selling pressure may trigger an upward movement in Ethereum's price.

However, some of these exits may be related to the liquidation of leveraged long positions. If the market becomes over-leveraged and traders are closing their positions, this can lead to short-term fluctuations. However, historically, such market resets have heralded a transition to a healthier structure.

On the other hand, looking at Ethereum's liquidation levels, it is seen that if the price moves upwards, more short positions may be forced to close. In other words, if the Ethereum price rises, the liquidation of short positions can push the price even higher.

Another critical indicator for the markets, Fed net liquidity data, indicates an expansion in the money supply in the financial system. The net liquidity, which has increased from 5.85 trillion dollars to 5.95 trillion dollars in recent days, could encourage investors to shift towards more risky assets. Historically, increased net liquidity has been a factor supporting the rise in prices of risky assets such as cryptocurrencies.