Bearish sentiment on ETH intensified after a sharp drop from ~$3,720 to $3,586 around 10am EST on July 25, following a high of ~$3,750 earlier.
Pressure has built over the past week, driven by onchain liquidity stress, lev positions, and deriv dynamics. It's funny to see the TL call for $3K; it will go higher. Great bounce. But if you're interested in what has happened over the past few days, then read on.
Aave liquidity strain: Whales, including addresses linked to Justin Sun, reportedly withdrew up to $1.7B ETH from Aave over the past seven days. Borrow rates have been trending up 3% → 10%+ and erratically spiking. This has been blowing up the stETH leverage loops, panic-unwinds dumped spot ETH.
stETH depeg & validator exits: stETH depegged a few days ago (0.997→0.985), validator exit queue jammed at ~680k ETH ($2.6B). Unstakers shorted/sold spot ETH to hedge exposure.
Cascading liquidations today: As price cracked $3.7K, Coinglass shows ~$150M ETH longs liquidated, worst of any coin in the session today. Forced sells accelerated the drop, creating the "air pocket" candle most desks flagged - the hourly was ugly.
Options expiry: I mentioned this in the tweet below ($2.75B expiring today); dealers short gamma sold aggressively into weakness, deepening the dip.
IMO just a fun day to events for ETH, nothing fundamental. chop chop szn. ETF flows will be interesting to see after close.
It looks like a fun end to the week. Galaxy selling $10B? In BTC plus another large options expiry.
$15B options expiry hitting BTC ($12.3B) and ETH ($2.7B) today @ 8:00 UTC.
Max pain around $112k BTC / $2.8k ETH. Big gamma zone at $115-120k BTC and $3-3.2k ETH, expect choppiness as ppl hedge.
HYPE OI still near highs ($14.7B) and tons of trapped longs at ~$40 support. Funding flat, watching for negative flip. If that happens and $40 holds, could rip. I’m impatient started adding to my longterm spot bags. Buy the red.
Wknd will be interesting after this week and heading into Fed.
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