Unexpected selling pressure has erased the recent progress made by Ethereum [ETH] in the early days of January.
Various factors contributed to this pressure, including a shake-up in leverage and outflows in spot trading, among other causes.
The most significant indicator of selling pressure was the outflows in ETH spot ETFs. The week began with $128.7 million in inflows on January 6th, following on from the positive inflows on January 3rd.
This initial influx might have created a false sense of security, leading to a fearful selloff after ETFs switched direction on January 7th.
In contrast, Bitcoin ETFs remained in the positive in the past 24 hours, showcasing a differing trend from that of ETH. This discrepancy highlighted the dominance issue between the two assets.
ETH ETF outflows on January 7th totaled $86.8 million, a figure consistent with the overall negative spot flows witnessed on exchanges during the same timeframe. Outflows hit a peak of $235.66 million on that particular day.
Decline in ETH Dominance, with Potential for a Reversal
The recent selling pressure led to a decline in ETH dominance, which had previously surged to 12.87% over the weekend but dropped to 12.32% in the latest turn of events.
ETH might make another attempt to increase its dominance from the current level, as the previous zone has proven to offer support.
The support level for ETH dominance aligns with the retest of support in ETH’s price action. The question remains – is the recent pullback complete, or could prices drop further?
The surge in long liquidations likely contributed to the recent selling pressure observed over the past two days.
The appetite for leverage has been growing in recent months, with long liquidations surging by more than 700% since January 3rd.
Over $173 million in liquidations was recorded in the past 24 hours, indicating that the rally in early January might have set the stage for a leverage reset.
Could ETH recover in the latter part of the week? The possibility exists, backed by a significant observation that could provide insights into the next market move. Whale investors have been offloading assets since the beginning of January.
However, recent data suggests that these whales have been accumulating during the recent dip.
On January 7th, ETH whales acquired 519,620 ETH, while outflows amounted to 411,300 ETH on the same day. This indicates that whales have been buying the dip, potentially facilitating a recovery later in the week.