On February 9, the American professional baseball team based in Washington, D.C., the Washington Nationals, announced the team has partnered with Terra, the open-source blockchain platform and decentralized autonomous organization (DAO). The Washington Nationals detail that the team is a “leading innovator” and is “consistently introducing new technologies to enhance the fan experience.” Washington Nationals Ink Long-Term Deal With Terra Major League Baseball (MLB) team the Washington Nationals has partnered with the blockchain platform and DAO Terra, according to an announcement published by the team on Wednesday. The deal with Terra follows a slew of sports-related deals with crypto firms, but the MLB team will be the first to partner with an open-source blockchain project. In addition to the partnership, the algorithmic stablecoin UST that’s issued on the Terra blockchain will be “accepted as a payment method at Nationals Park as early as next season.” “The Nationals continue t...
Ether, the native cryptocurrency of Ethereum, rose to $1,161 but immediately corrected thereafter.
The price of Ether (ETH), the native cryptocurrency of the Ethereum blockchain, achieved $1,161 for the first time since January 2018. Immediately after it hit a new three-year high, ETH corrected to below $900.
Ether rallied due to the momentum of Bitcoin. Historically, following a strong BTC rally, altcoins saw a swift uptrend. Traders usually call this “altseason” because many altcoins tend to increase in tandem.
Why did Ether correct and what happens next?
Ether rose following Bitcoin’s rally, but on-chain data also showed that there was a sell-side liquidity crisis.
Throughout 2020, the reserves of ETH on exchanges declined to historic lows. This means that there has been a lower number of ETH that could be sold on exchanges. Ki Young Ju, the CEO of CryptoQuant, explained:
“It seems the sell-side liquidity crunch started to hit $ETH just like the $BTC market. For $BTC, all exchanges' reserves decreased by 31% compared to Feb 2020. For $ETH, all exchanges' reserves decreased by 20% compared to May 2020.”
However, despite the strong rally to levels unseen since January 2018, Ether swiftly pulled back. There are two main reasons behind its correction: high funding and heavy sell orders at a key resistance level.
According to data from Glassnode, the futures funding rate of Ethereum is averaging 0.2% across major exchanges.
Normally, the funding rate stays at around 0.01% when the futures market is not overheated. Analysts at Glassnode said:
“Ethereum funding rates are at a record high, breaking an average of 0.2% across major exchanges. #BitMEX is leading the pack with a funding rate above 0.4%.”
When the market is overwhelmingly swayed to buyers or long contract holders, the probability of a long squeeze rise.
The term long squeeze refers to a scenario during which long contract holders are forced to liquidate their positions when the price of Bitcoin drops. This leads the selling pressure on BTC to intensify in a short period.
Where traders see Ethereum going next
A pseudonymous trader known as “Mayne” said Ethereum rejected from the weekly supply level, which is where the price of ETH was at when the weekly candle opened on Monday. The trader said:
“Rejected from weekly supply EQ for now. Predicted funding going ham, seems like apes are mashing the leverage long green button. I'm out of leveraged longs for now.”
Market and on-chain data generally suggest that late buyers are being squeezed out by aggressive sellers. As soon as ETH surpassed $1,100, the spot market saw an increase in sell orders.
Alex Wice, one of the top-performing traders on the FTX leaderboard, shared a short position on both Ethereum and Bitcoin on social media.
The trader also similarly expressed concerns regarding the high funding rate of Ethereum and suggested that they would have to reset.
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