Key Points
- A sudden surge in sell pressure has erased Ethereum’s early January gains.
- Ethereum’s dominance dips, but it could pivot as whales accumulate during the dip.
Ethereum’s Initial Gains Wiped Out
A sudden wave of selling pressure has erased the early January gains of Ethereum (ETH).
This sell pressure was due to multiple factors, including a leverage shake-down and spot outflows.
Spot Outflows and ETH Dominance
The outflows from Ethereum spot ETFs were a significant sign of the selling pressure. The week began with $128.7 million inflows on January 6th, building on the inflows from January 3rd.
However, this may have given a false sense of relief, leading to a fear-driven sell-off after ETFs pivoted on January 7th.
In contrast, Bitcoin ETFs remained positive in the last 24 hours, despite Ethereum’s opposite outcome. This reflects the dominance situation.
Outflows from Ethereum ETFs amounted to $86.8 million on January 7th, consistent with the total negative spot flows observed on exchanges during the same period. Outflows peaked at $235.66 million on this date.
The sell pressure significantly impacted Ethereum’s dominance, which had previously rallied to 12.87% over the weekend. However, recent events sent it as low as 12.32%.
Ethereum might attempt to regain higher dominance from its current level, as the same zone previously demonstrated support.
Leverage and Whales
Leveraged long liquidations likely contributed to the sell pressure observed in the last two days. The appetite for leverage has increased over the last few months, with long liquidations rising by over 700% since January 3rd.
More than $173 million worth of liquidations were observed in the last 24 hours. This suggests that the early January rally may have been a set-up for a leverage shake-down.
Could Ethereum bounce back in the second half of the week? This seems plausible due to a major observation: whales have been selling since the start of January, but recent data shows they have been accumulating during the dip.
On January 7th, while outflows were lower at 411,300 ETH, Ethereum whales accumulated 519,620 ETH. This suggests that whales have been buying the dip and could potentially aid in a mid-week recovery.
