Volatility frequently accompanies speculation, and Ethereum serves as a prominent illustration of this phenomenon. The past 48 hours have exhibited significant volatility for the altcoin. According to reports, approximately $300 million in long positions have been eliminated. However, this still does not compare to the liquidity squeeze observed earlier in October, which resulted in nearly $500 million of positions being liquidated as ETH fell below the $2.5k support level, prompting a 7% correction. This time, despite the elimination of nearly $300 million in long positions, ETH has experienced a correction of just over 1%. This indicates that the selling pressure is currently maintained at a relatively subdued level. Could this indicate that Tom Lee was correct in asserting that Ethereum is nearing its bottom?
As illustrated in the preceding post, a trader asserting a flawless 100% win rate has initiated yet another long position on Ethereum. The trader employed 25x leverage to take a long position on 20,277 ETH, amounting to an investment of $45.3 million. This trade has already resulted in a profit of $252,000. The noteworthy aspect is that the trader’s preceding 10 trades have consistently yielded profits, culminating in $6.32 million in realised gains. Given this track record and the fact that ETH has exhibited limited downside despite significant futures selling, this could be a noteworthy indication. It may indicate that the trader is strategically positioning in anticipation of a potential recovery that the broader market has not yet accounted for, thereby providing an additional bullish perspective to Tom Lee’s $2k ETH bottom thesis.
That being noted, the genuine evaluation may yet lie in the future. The market remains sceptical regarding whether Ethereum has reached its nadir. On-chain data indicates that uncertainty is impacting staking demand, which is steadily declining. ValidatorQueue reports over 1,036,882 ETH, worth more than $2.3 billion, queued for the Ethereum mainnet validator. ETH staking has seen a significant decline from 3,737,802 six months ago, indicating reduced investor interest. Institutional sentiment stays negative. In just five weeks, Ethereum ETFs have seen ongoing outflows, totalling $270 million in net losses within the first week of November alone.
November may witness outflows surpassing October’s $1.6 billion, intensifying pressure on ETH and its recovery potential. Calling an Ethereum bottom may be premature unless these factors improve. ETH is still vulnerable to more declines. Long positions are rising even as technicals fade, staking demand weakens, and ETF outflows increase. A significant long-liquidation cluster lies beneath $2200 ETH. If sentiment stays weak, ETH might dip below $2k, possibly sweeping this liquidity before a rebound. The market might require another dip to bolster Tom Lee’s bottom thesis.
