Liquidation Risks Could Stall Bulls

Ether (ETH), the native token of the Ethereum blockchain, has shown substantial gains recently after trailing market leader Bitcoin (BTC) for most of the current market cycle. However, ETH is now nearing a crucial resistance level of $3,500, and data suggests the bulls may struggle to break through.

According to a post on blockchain analysis platform CryptoQuant’s Quicktake by Amr Taha, the number of ETH tokens moving to derivatives exchanges is rising rapidly. This significant inflow often indicates that traders are opening short positions, which could hinder Ether’s upward momentum.

Data from Coinglass’s ETH Exchange Liquidation Map shows that $1.93 billion in ETH longs would be liquidated if the price falls to $3,100. Conversely, if the price reaches $3,100, over $760 million in ETH shorts would be liquidated.

Meanwhile, the ETH burn rate is also increasing. The Ethereum network has two “engines” that burn Ether when demand exceeds supply—blockspace burn and blobspace burn. With the amount of burnt ETH rising, investors anticipate the altcoin will surge.

ETH Prints Higher Highs

ETH has rallied substantially in the past few weeks, gaining 10.15% in the past week and 36.49% in the past month. Furthermore, the digital asset has risen 67.80% since November 2023 and has a market capitalization of $413.10 billion at the time of writing.

The second-largest digital asset is trading at $3,430.25, down 30.05% from its all-time high of $4,891.70, set in November 2021. The digital currency broke above $3,000 for the first time since July of this year, and investors are now hoping for a new all-time high by December-end.