Ethereum is going through a difficult market phase, with prices facing persistent selling pressure despite a tightening supply. On the charts, ETH has shown signs of weakness, with repeated rejections at key resistance levels and fading momentum suggesting sellers remain in control in the near term. A significant portion of ETH supply remains locked in staking contracts, reducing the amount of liquid ETH available in the market.
Blocked Supply Continues to Squeeze Ethereum Circulation
Ethereum is under selling pressure on the charts, but supply is blocked by staking. An analyst known as Sjuul AltCryptoGems on
At the same time, the exit queue is almost empty, indicating that very few participants are withdrawing their holdings, which constitutes a clear imbalance. If trust were low, exit activity would increase and staking demand would slow, but the opposite occurs.
Investors have continued to lock up their ETH for months with a yield of around 2.7%. Total stakes have now exceeded 38 million ETH, representing over 31% of the total supply, and this figure continues to grow despite the downward price trend.
This divergence highlights a key dynamic. While ETH price shows weakness, network participation signals strength. There are long wait times to enter staking and almost no wait times to exit. This kind of disconnection doesn’t last long. Currently, supply is stuck in circulation while demand is increasing.
How Ethereum long and short positions are decreasing across the board
Ethereum’s recent price weakness could be largely due to a change in hedge fund positioning. According to crypto investor CW, data shows that hedge funds significantly reduced their long positions in ETH around two weeks ago, particularly on Coinbase Derivatives, suggesting that many liquidated their holdings or exited their trades to cut their losses.
This wave of unwinding of long positions has added notable selling pressure, with US hedge funds becoming the main force currently weighing on the market. There is a shift in sentiment that contrasts with other participants, as brokers and asset managers are largely neutral or still retain a slight edge on long positions. CW says a significant, broad-based rally will begin when hedge funds turn bullish.
Activity on long and short positions on Ethereum decreased compared to the previous day. CW also noted that highly leveraged long positions are estimated at around $1.1 billion, while short positions far exceed them, at around $4.22 billion. However, if the price of ETH increases by $100, several short positions would be liquidated.
