Ethereum is facing weakening institutional demand at the same time as derivatives traders are aggressively selling, although the broader price structure has not been broken yet.
US spot ETH exchange-traded funds experienced $50.76 million in net outflows on Oct. 5, marking their fifth consecutive session of losses. This trend has resulted in a total loss of $205.88 million since Sept. 29, bringing cumulative net inflows down to approximately $13.75 billion.
Despite ETH trading near $2,711, a major source of demand seems to be retracting. However, not all investors are feeling the same pressure.
According to blockchain analytics firm Santiment, Ethereum’s Age Consumed metric spiked to 580 million token-days on Sept. 30, a significant increase compared to its September average. This surge indicates that previously inactive coins are now moving onchain, potentially signaling a repositioning of assets by long-term holders.
While the derivatives market is showing signs of bearish sentiment, the signals are mixed. CryptoQuant data reveals that Ethereum’s Estimated Leverage Ratio has dropped to 0.66, its lowest level in seven months. This suggests a decrease in open derivatives exposure relative to ETH reserves held on exchanges.
Although ETH open interest on Binance has increased by approximately 43% since Aug. 6, Cumulative Net Taker Volume (CVD) has seen a sharp decline. This metric reflects a shift towards aggressive selling in the market.
Despite the increase in aggressive selling, Ethereum’s price has not seen a significant decline, indicating that buyers are absorbing the sell orders. This dynamic may lead to a short squeeze if funding rates turn negative and short sellers are forced to cover their positions.
Overall, the Ethereum market is being pulled in different directions by ETF withdrawals, movements of dormant coins, and aggressive selling in derivatives. The next move in the market could be influenced by a shift in these forces, either towards increased selling pressure or a potential recovery in institutional demand.
