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ETH Ethereum faces further correction risks: Weak spot demand combined with a large number of short positions
Analysts Ted Pillows and Darkfost pointed out that Ethereum (ETH) still faces further correction risks as weakening spot demand offsets the decline in exchange reserves and heavy short positions. Binance's ETH reserves have dropped to a six-month low, while withdrawals have reached a daily record high. Meanwhile, market data showed ETH was struggling near $2,500 after a sharp decline in October.
Binance ETH reserves fall to six-month low
Darkfost reported that in the past three days, Binance's ETH reserves have dropped from 3.57 million to 3.47 million. In August, reserves were 3.92 million ETH, a decrease of nearly 11.5%. In addition, withdrawals have also surged significantly, with Binance recording more than 320,000 withdrawal transactions on October 6. Darkfost said investors continued to move ETH off exchanges despite falling prices, which could indicate that they intend to hold or plan to use the assets for the long term.
Broader market adjustments have also affected Ethereum. The Total2 index, which tracks the total market value of altcoins, evaporated more than $110 billion in three days. At the same time, ETH prices fell 11%, causing its market value to shrink by more than $38 billion.
Weak spot demand and unbalanced short positions
Ted Pillows said that most of the downward liquidity in ETH has been cleared. However, he pointed out that there are currently about $5 billion in short positions, compared with only $1.53 billion in long positions. Despite the imbalance, Pillows views weakening spot demand as a concern. He said that even after the recent liquidity purge, reduced demand could still make Ethereum vulnerable to another pullback.
ETH prices are difficult to recover above US$2,500
The spot inflow and outflow chart shows that ETH prices fell to around US$2,550 from about US$2,700 on October 6 - 7. It then fell to the range of approximately US$2,420 - 2,450 on October 8, and did not recover to around US$2,500 until October 11.
Data records show net inflows of approximately US$80 million to US$100 million occurred between October 1 and 5. However, outflows intensified from October 6 to 7, with a net outflow peak of nearly $150 million on October 7. After October 8, net flow was closer to zero, with occasional positive readings of $10 million to $30 million.
Currently, ETH faces support in the US$2,450 - 2,500 range, while US$2,600 and US$2,700 remain resistance levels above.
