Ethereum could be under heavy selling pressure this week, here’s why

  • ETH may be prone to more selling pressure as Voyager liquidates its holdings.
  • Long positions are shifting in favor of short positions as bearish market conditions prevail.

The specter of the crypto contagion in 2022 has not yet been banished. A wave of ETH there could be selling pressure thanks to the upset crypto firm Voyager.

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Crypto research company Arkham recently confirmed that Voyager has begun the process of liquidating its digital assets.

The company filed for bankruptcy after a series of unfortunate market events led to heavy losses. Initial data reveals that Voyager has just over 100,000 ETH in its addresses, which will be liquidated to pay off creditors.

The amount of ETH to be liquidated is worth over $150 million. The report further revealed that the funds will be sent to Coinbase and Wintermute addresses.

These liquidations could lead to a lot of selling pressure over the next few days. Such an outcome could trigger a deeper downside move below $1,500.

ETH bears have so far pulled the price down roughly 12% from its highs in February to its price of $1,527 at press time. However, Voyager’s liquidations are not the only ones bears apprehensions for bullish traders.

ETH price action

Source: TradingView

Bullish expectations have eased over the past few weeks thanks to an expected interest rate hike. Federal Reserve Chairman Jerome Powell recently reignited those bearish expectations during a recent Senate hearing. He revealed that the FED may have to raise rates to have a better chance of fighting inflation.

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Are ETH Derivatives Traders Taking Advantage?

As the aforementioned issues take center stage, short traders will look to capitalize. This is likely to be the case according to multiple metrics, including the estimated futures leverage ratio. The latter improved over the past two weeks as prices fell.

Expected ETH Futures Leverage Ratio

Source: Glassnode

The growth in the calculated leverage ratio for futures has been particularly evident over the past two days, confirming the healthy demand for leverage.

The price is down at the same time. Additionally, the ETH open interest indicator has been rising this week and especially over the past two days. A potential sign that there is demand for shorts.

ETH open interest, long and short liquidations

Source: CryptoQuant

Another notable observation regarding the state of derivatives is that investors have shifted out of long positions possibly in favor of short positions.

The long liquidation indicator shows a decline in liquidations thanks to bearish market conditions.

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