Ethereum, long positions at an all-time high…a prelude to a massive crash?

▲ Ethereum (ETH) ©

As Ethereum fell to its lowest point in a month amid the shock of surging U.S. Treasury yields, market vigilance regarding the possibility of a large-scale liquidation of long positions is growing.

According to investment media outlet FXStreet on May 16 (local time), Ethereum (ETH) fell 3.3% that day, momentarily dropping below $2,110. This is its lowest level in about a month. The U.S. 10-year Treasury yield rose to 4.59%, reaching its highest level since May last year, increasing selling pressure across risk assets. Indeed, the Nasdaq 100 index also fell 1.23% that day, and the media analyzed that ETH shows a higher beta tendency compared to tech stocks in a bearish market.

In the derivatives market, however, aggressive position expansion continued. Ethereum futures open interest increased to an all-time high of 15.6 million ETH. Furthermore, funding rates have remained positive for over a week, marking the longest positive trend since January. The media diagnosed that with long positions being maintained even as prices fall, the possibility of a large-scale long squeeze (forced liquidation of buy positions) increases with further declines.

Institutional fund flows were sluggish. According to SoSoValue data, U.S. spot Ethereum ETFs experienced net outflows throughout this week, with a total of $189 million exiting over four consecutive trading days. Simultaneously, in the ETH market over the past 24 hours, liquidations totaling $103 million occurred, of which $97 million was attributed to long position liquidations.

Technically, an analysis emerged that all major moving averages are acting as resistance zones. ETH is currently trading below the 10-week exponential moving average (EMA) of $2,267 and the 20-week EMA of $2,415. The Relative Strength Index (RSI) was around 41, indicating a slowdown in buying momentum, and the Stochastic Oscillator (Stoch) also suggested weakening upward momentum. The media warned that if ETH closes below $2,267 on a weekly basis, the 10-week EMA could turn into a key resistance level.

Short-term support levels were identified in the $2,211 and $2,108 range. If these support levels break, further declines to $1,909, and then to $1,741 and $1,524, were also mentioned as possibilities. Conversely, on the upside, the $2,388 and $2,416 range was pinpointed as a key resistance zone, with $2,725 and $2,788 suggested as the next target zones above that.

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