Ethereum (ETH) derivative markets are going through another big accumulation. Historically, derivative market inflows are linked to big price moves.
Ethereum (ETH) derivative markets are having another day of peak inflows. Data by CryptoQuant analysts show over 77,000 ETH flowed into derivative exchanges. Similar inflows were observed on March 26 and April 3, followed by an ETH crash to a lower range.
The inflows signal arrives at a time when ETH sentiment is bearish, and the market price has broken below the growth trend since the 2022 bear market. For some analysts, the current low sentiment may be a sign of a market bottom, while for others, another drawdown is possible.
The current inflows to derivative exchanges surpass the previous inflows of around 65K ETH. The token is closely watched for signs of a bigger price move, especially with the current price pressures.
ETH is at a crossroads, with traders waiting for either a breakout or a new crash to a lower range. After the recent inflow to exchanges, ETH open interest is slightly up to $8.28M, with around 35% in short positions.
The current price action follows a period of accumulation and signs of whales buying. The overall ETH balance in accumulation addresses has also surged in Q1 and retained the trend in April. Whales also try to re-buy ETH at a lower range, after selling at local peaks.
ETH liquidity puts the token at a crossroads
The price move for ETH is not guaranteed to be on the downside. Based on the Ethereum positions heat-map, the market is accruing liquidity both around the $1,500 level, and as high as $1,700 for short positions.
From the current price level, it remains uncertain which positions would be attacked first. ETH traded around $1,590.22, showing some weakness after retaining the $1,600 level for a day. The asset still traded near its lows of 0.019 BTC.
While ETH expects a breakout, a new slump to a lower range is also seen as a possibility. ETH currently trades on renewed risks based on the US tariff policy against China.
Ethereum also reflects the health of the overall DeFi sector, as the chain carries over 49% of all value. The chain remains indispensable for DeFi apps, but the value of ETH reflects the general confidence in the crypto ecosystem.
DeFi rebuilds ETH liquidity
After a period of liquidations, DeFi protocols are rebuilding their liquidity positions, showing the new risk profile for ETH.
Currently, DeFi lending protocols carry $937M in positions that can be liquidated if ETH falls to a lower range. The biggest accumulation of liquidity is at $917.99, where most whales decided to secure their loans.
Some of the borrowers have taken out loans with a liquidation price of $1,123,390, mostly on MakerDAO. However, borrowers remain extremely cautious in rebuilding their positions. There are almost no loans with a liquidation price in the $1,500 and $1,400 range.
ETH still holds over $47B in total value locked, led by Aave and liquid staking protocols.
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Disclaimer: For information purposes only. Past performance is not indicative of future results.
