Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, is issuing a sell-off signal, indicating a notable price drop in the coming days. Over the past three days, sentiment in the cryptocurrency landscape has noticeably shifted to the bearish side, leading to a significant price drop.
Ethereum (ETH) Technical Analysis and Upcoming Levels
However, this price decline is expected to continue as ETH has formed bearish price action on the daily time frame. According to expert technical analysis, ETH has broken the bearish head-and-shoulders pattern and breached a crucial support level at USD 3,250.
This collapse in bearish price action has pushed traders into short positions, which could impact ETH’s price in the coming days. Historical data shows that $3,250 has been a strong support level for ETH over the past three months, consistently providing a bottom when market sentiment turned bearish.
However, this time the altcoin has failed to maintain this level. Based on recent price action, if ETH closes a daily candle below the $3,200 level, there is a high chance of an 11% decline, taking it to the $2,850 support level.
Bearish on-chain metrics
This bearish outlook has prompted traders to take short positions, as reported by the on-chain analytics firm Mint glass. Currently, the ETH long/short ratio stands at 0.884, indicating strong bearish sentiment among traders. Moreover, data shows that at the time of writing, 53.07% of top traders have short positions, while 46.93% have long positions.
Major liquidation levels
Moreover, the main liquidation areas are at the levels of $3,185.5 on the downside and $3,361.9 on the upside, with traders heavily overleveraged at these levels, as shown by the liquidation map of the ETH exchange.
If current sentiment remains unchanged and the price falls to the $3,185.5 level, nearly $261.01 million in long positions will be liquidated. Conversely, if sentiment changes and the price rises to the $3,361.9 level, short positions worth approximately $708.16 million will be liquidated.
This data shows that the short positions created by sellers are more than double the long positions created by buyers, indicating strong bearish sentiment.
Current price momentum
Currently, ETH is trading around $3,225, after dropping more than 1.65% in the past 24 hours. However, over the same period, trading volume has fallen by 29%, indicating reduced participation from traders and investors.
