Why Ethereum whales could decide ETH’s upcoming price action
- ETH liquidity on Uniswap suggested that bullish sentiment was brewing.
- Exchange flows point towards sell pressure. Could whales be playing the market once again?
Ethereum [ETH] holders are once again speculating about the next move courtesy of the consolidation in the first week of September. However, information is king, especially in the blockchain world, and having information beforehand may eliminate some of the guesswork.
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On-chain market data may offer insights into the next trend before the majority of market players. In ETH’s case, a recent Glassnode analysis may offer just that. The analysis looks into liquidity concentration on Uniwap pools and the findings are rather interesting.
According to the analysis, roughly 30.4% of ETH liquidity is within 11% of the cryptocurrency’s current price range. Moreover, most of the Uniswap users anticipate at least an 8.6% upside or a maximum 2.7% downside.
Traders have also set aside a second tier of liquidity in case of a maximum 8.5% downside to the next support level. After which a 23%+ upside is anticipated.
The highest concentration of liquidity in the #Uniswap Pool (approx 30.4% of capital) is located within an 11% price range, with expected downside of -2.7% and upside of +8.6%.
A second tier of liquidity is positioned with a -8.5% buffer to the downside, and a +23.7% buffer to… pic.twitter.com/QGx3JaWgEa
— glassnode (@glassnode) September 6, 2023
Based on the above analysis, we can see that Uniswap traders were more inclined towards bullish expectations for ETH. In other words, there is a high likelihood that most Uniswap users interested in ETH would buy at its current discounted price level.
Assessing the state of ETH sentiment
ETH’s longs vs. shorts ratio reflected the observations made on Uniswap liquidity. According to Coinglass, 32% of ETH traders were bullish while 16% were very bullish in the last 24 hours.
On the other side of the spectrum, 19% of ETH traders were bearish while 14% were very bearish. This means the bullish sentiment outweighed the bearish sentiment in the last 24 hours. The remaining percentage represented the neutral sentiment.
How many are 1,10,100 ETHs worth today
We also observe that the appetite for leverage was seen making a comeback after declining since mid-August. The estimated leverage ratio has been steadily rising since 2 September to the time of writing.
However, it is worth noting that despite the uptick, the prevailing level of leverage was still relatively low compared to levels observed in the first half of August.
While the above analysis suggested a potential bullish outlook, exchange flows still stood in favor of short-term sell pressure. Exchange inflows have been on the rise in the last three days. This reflected the heavy outflows that were observed from whale addresses to exchanges recently.
Meanwhile, exchange outflows pulled back considerably in the last two days. A potential sign that accumulation was slowing down. On one hand, these findings could signal that selling pressure was resuming.
On the other hand, this could be a trap from whales looking to set up a bear trap. Whale activity will determine the next major price move.