Whales and Institutions Using Ethereum Bulls As Exit Liquidity As ETH Rejects From Resistance: Top Analyst

A widely followed crypto analyst says that large entities are using bullish Ethereum (ETH) traders as liquidity to exit the markets.

In a new DataDash update, crypto analyst Nicholas Merten tells his 512,000 YouTube subscribers that many ETH traders are now trapped after Ethereum got rejected from resistance.

“We were talking about how Ethereum was going to deviate above this range and that this again was the perfect range to start looking at getting bearish, essentially starting to create a plan for potential short positions, especially if we see that weakness. And take a look here at what we got, an 11 or 12% move down in a single week, completely reverting those gains and [it’s] looking like we’re ready to continue moving lower in the near term. Now why is this the case here?…

This was the highest range we’ve been in since back towards around May of 2022. This is what gets a lot of traders trapped because a lot of people think that when you break that potential resistance or that resistance that’s been holding the price down for nearly a year, that’s the time when everyone feels the urge to go long.”

Merten says that whales and institutions are likely taking advantage of ETH’s current price structure and the exorbitant bullishness in the markets. He says he’s anticipating prices heading significantly lower as the bigger traders take profits on the recent rally.

“If you’ve been sitting on the sidelines, you got cash, you’re feeling the FOMO (fear of missing out), and that’s the time when everyone thinks they need to strike. Everyone who didn’t catch the broader probably beginning at that point, and there’s the optimal time for large-scale investors who have been riding this wave for a long period of time.

That is the period of time when they offload. They use those buyers as exit liquidity to sell positions they bought at a much greater discount at a much higher valuation. That’s the name of the game guys, and if you’re trading with that emotion, you will be utilized by these larger investors, these smarter people who essentially will take advantage of those emotions.”

Merten also looks at the big-picture macro conditions and warns that the U.S. Federal Reserve is going to continue tightening interest rates to fight inflation.

“Contrarians in this environment cannot ignore the reality that in the macro environment right now, there is still a lot of inflation in the economy, and that the Federal Reserve is going to have to continue tightening much higher than people expect. We have been on that narrative for the past year, year and a half, whereas a lot of other people have been just constantly bullish, and it has proven right time and time again that inflation is sticky, it takes time to correct.”

ETH is worth $1,837 at time of writing, down 13% in the last week.

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