Ethereum is in a challenging market phase, with its price facing continued selling pressure despite a tightening supply landscape. On the charts, ETH is showing signs of weakness, with repeated rejections at key resistance levels and declining momentum, suggesting that sellers remain in control in the short term. A significant portion of ETH supply remains locked through staking contracts, effectively reducing the amount of liquid ETH available in the market.
The blocked supply continues to tighten circulating Ethereum
Ethereum experiences selling pressure on the charts, but supply is blocked by staking. An analyst known as Sjuul has AltCryptoGems on X pointed out which reportedly has almost 3 million ETH waiting to be staked, with the queue for participation stretching to around 50 days.
At the same time the leave the queue is almost empty, indicating that very few participants are withdrawing their holdings, which is a clear imbalance. If confidence were weak, exit activity would increase and demand for shares would decrease, but the opposite is happening.
Investors continue to lock in their ETH for months at a yield of around 2.7%. The total number of stakes has now exceeded 38 million ETH, accounting for over 31% of the total supply, and this figure continues to grow despite the lower price trend.
This divergence highlights an important dynamic. While ETH price shows weakness, network participation signals strength. There are long wait times to enter the strike and almost no wait time to exit. This kind of disconnect doesn’t last long. At this point, supply is cut off from circulation while demand increases.
How long and short positions in Ethereum are shrinking across the board
The recent price weakness in Ethereum may be largely driven by a shift in positioning among hedge funds. According to According to crypto investor CW, data shows that hedge funds significantly reduced their long ETH positions about two weeks ago, especially on Coinbase Derivatives, indicating that many have liquidated their holdings or halted their trades to limit losses.
This wave of unwinding of long positions has created significant selling pressure, with US hedge funds emerging as the main force currently weighing on the market. There is a shift in sentiment that contrasts with that of other participants, as dealers and asset managers are largely neutral or still retain a small edge in long positions. CW argues that a meaningful large-scale rally will begin when hedge funds turn bullish.
Activity in both long and short positions on Ethereum decreased compared to the day before. CW has that too noted that the highly leveraged long positions are valued at approximately $1.1 billion, while the short positions significantly exceed this at approximately $4.22 billion. However, if the ETH price rises by $100, several short positions would be liquidated.