- Ethereum liquidity providers reduced their long positions.
- ETH investors remained bullish into 2025, despite high speculation.
For nearly two weeks, Ethereum [ETH] has experienced high fluctuation. Over this period, ETH prices have dropped from $4109 to $3219. This price volatility has left the altcoin trading sideways.
These market conditions have left analysts talking about Ethereum’s performance into 2025. Inasmuch, Cryptoquant analyst Sun Moon has suggested a robust performance for ETH in Q1 2025 citing market stability.
Ethereum’s liquidity providers reduce long positions
According to CryptoQuant, Ethereum’s liquidity providers have reduced long positions. When entities and traders that supply capital into ETH reduce their long positions, it indicates a shift in sentiment.
If liquidity providers reduce exposure, the market may struggle to sustain bullish momentum without fresh buying pressure.
Source: CryptoQuant
The analyst further noted that despite the shift in sentiment, Ethereum’s long liquidations have declined. This absence of widespread liquidations implies that the market is becoming more stable.
Thus, market corrections are less likely to trigger cascading sell-offs.
Therefore, going into 2025, ETH is following the same pattern as last year. In 2023 December, ETH prices surged from $2045 to $2448 before the correction then declined to $2259 as the year ended.
Starting January 2024, prices spiked from $2281 to $2717 then followed a 2-week consolidation before a strong upswing to $4090.
Therefore, if the prices follow the same pattern, and history is anything to go by, ETH prices will see a strong upswing. As the analyst noted, Ethereum’s price will rise significantly in 2025 Q1.
What it means for ETH
Despite Ethereum’s liquidity providers reducing long positions, ETH is still experiencing a significant demand for long positions amidst strong speculative activity.
As such, according to AMBCrypto’s analysis, Ethereum is currently seeing a leverage-driven market.
Source: CryptoQuant
For starters, this is evidenced by the fact that the estimated leverage ratio has experienced a sustained rise. Over the past month, ELR has spiked from 0.4 to 0.56.
This upsurge reflects heightened speculation as investors are more willing to take risks with borrowed funds to maximize potential gains and losses.
Source: Santiment
Additionally, the Binance Funding Rate has remained positive over the past month.
This shows that even though liquidity providers are continually reducing their capital inflow, traders are still anticipating prices to rise and the demand for long positions is still high.
ETH, going into 2025
Simply put, although liquidity providers are reducing their funds, the demand for longs is still high as observed above. Therefore, ETH is still seeing strong speculation activities.
Although speculative market activity can result in prices collapsing, it can also drive prices up in the short term.
Going to 2025, Ethereum’s market needs to strengthen its fundamentals and rely less on a speculative-driven market, as it’s prone to corrections.
Read Ethereum’s [ETH] Price Prediction 2025–2026
Therefore, with demand for longs still high, it suggests the market is still bullish and ETH is entering 2025 with positive sentiment.
If bullish sentiment holds, ETH will break out of the $3500 consolidation range and challenge $4000 where it has faced multiple rejections. However, if the speculation bubble burst, ETH could drop below $3000.
