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Indeed, the market shows excitement as the awaited Ethereum Merge approaches. ETH’s price action also reveals that, with the altcoin exploring past the crucial $2K level. However, this could be the time to indulge in the FOMO and hype. However, Ether holders should understand possible risks ahead.
Ethereum registered a high capital flow within the past few days. And that catalyzed more uptrends on the price chart. The excitement and FOMO surrounding the Merge could only increase.
Remember, the Merge stays some weeks away, and the euphoria from the mentioned price surge prints opportunities for unpredicted shorting from whales. Thus, there’s a necessity to remain cautious.
Evaluating Long Liquidation Risks
Futures long liquidations plummeted severely since August 9 as the price maintained uptrends. That enabled leveraged longs to flourish amid present market conditions. Meanwhile, Futures short liquidations registered a swift uptick on August 9 before resorting to downtrends the following day. That remains the scenario since.
The decline in Futures short liquidations indicates that market players are joining the bullish craze. Meanwhile, Ethereum’s dormancy metric remains on the lower side of its four-week performance during this publication. That means traders are holding instead of selling the tokens, expecting higher prices in the coming sessions.
Ethereum’s dormancy metric matches the indications concerning short and long positions within the market. Moreover, that confirms a massive demand for Ether and reduced selling momentum. However, as highlighted above, the Merge remains weeks away. That means anything can occur.
One possibility is whales capitalizing on the latest inflows by massive short positions. Such developments could erase some returns and liquidate leveraged longs. That would result in amplified selling pressure.
While publishing this blog, Ethereum Futures Open Interest stood at its highest mark within the past four weeks. Remember, market manipulators usually hunt for such opportunities within the marketplace.
Anything might occur within the next four weeks. And that includes a significant retracement from a massive short.
Meanwhile, such a trend would erase leverage positions, possibly catalyzing a substantial pullback. However, that’s a possible near-term risk and doesn’t necessarily impact Ethereum’s long-term performance.