Ethereum (ETH) price faces short squeeze risk as institutional investor interest wanes

Ethereum currently faces short squeeze risk as indicated by the rising estimated leverage ratio (ELR), which serves as a key indicator of market sentiment.

The rise in ELR over the past few months reflects an increase in the number of traders adopting highly leveraged short positions.

Ethereum faces short squeeze risk

CryptoQuant data shared by market analyst “ShayanBTC” suggests that traders are betting on further decline in ETH price as the bearish outlook continues. With leverage levels reaching worryingly high levels, the futures market appears to be overheating and Ethereum is at risk of a short squeeze.

ETH has fallen over 2% in the past day alone and is currently trading just above $2,580. If the price of a crypto asset rises unexpectedly, those holding short positions may be forced to buy back ETH to cover their losses, potentially leading to a spike in price.

The 100-day moving average at $2,700 serves as a key resistance level. Therefore, crossing this threshold could trigger significant short-term liquidations and further increase the ETH price.

Reduced appetite in the facility

Meanwhile, the data also shows that appetite for ETH by institutional investors has waned in the US market, even though the Spot Ether ETF attracted net inflows of $11.94 million on Tuesday, mainly driven by BlackRock's ETHA fund. It also shows that. Other investment vehicles did not record flows. According to a CryptoQuant analysis shared by analyst “burakkesmeci”, Ethereum’s Coinbase Premium Index has fallen below its 14-day simple moving average (SMA).

This crossover typically indicates increased selling pressure from US investors and could lead to a decline in the price of ETH.

Looking at the current value, the Coinbase Premium Index is -0.05062437, while the 14-day simple moving average (SMA 14) is -0.03906392. Coinbase serves as a preferred platform for institutional investors, and the fact that the premium index is now more negative than the SMA could suggest that large players are reducing their ETH exposure. It is important to note.