Ethereum (ETH) derivatives traders have reacted to the altcoin’s failure to sustain the $3,500 level by increasing their short positions. This surge in bearish bets suggests that a majority of traders anticipate further price declines for ETH.

However, do other metrics align with this sentiment? This on-chain analysis explores whether these traders might be making the right call — or if the data hints at a potential rebound.

Ethereum Shorts Outpace Longs Amid Profit-Taking

As of this writing, the liquidation map reveals that Ethereum derivatives traders have opened short positions totaling $918 million since the cryptocurrency’s price drop yesterday. 

In trading, going long or short represents a trader’s expectation of price movement. Opening a long position suggests the trader believes the price will rise. Going short, on the other hand, indicates that they expect a decline.

Currently, ETH long positions are valued at approximately $218 million, highlighting that shorts have significantly outpaced bullish exposure by $700 million. However, it is important to note that if Ethereum’s price rallies toward $3,700, most of these positions with high leverage might face liquidation.

However, data from Glassnode suggests that these traders may not face liquidation unless a significant rebound occurs. This is primarily due to the rise in realized profits, which indicates that traders have locked in gains by selling or transferring assets at a higher price.

As of press time, Ethereum’s realized profits had surged to $659.22 million, suggesting that most shorts have capitalized on the price movement and may be less vulnerable to liquidation in the short term.

ETH Price Prediction: Bearish

Since November 16, ETH’s price has been trading within an ascending channel. An ascending channel is a chart pattern formed by two upward trend lines, one drawn above the price (resistance) and the other below (support). 

This pattern indicates that the price is moving higher within a defined range. The support line shows where the price tends to bounce higher, and the resistance line marks where the price faces selling pressure.

As seen below, ETH, at $3,314, has dropped below the support line. If selling pressure intensifies, the cryptocurrency’s value is likely to sink to $3,033. 

However, Ethereum derivatives traders need to watch out. Should the altcoin fail to drop below $3,220, this might not happen. Instead, the value could rise to $3,547 and possibly climb to $4,000.

Uniswap, the largest decentralized exchange (DEX), has announced a $15.5 million bug bounty for vulnerabilities in its v4 upgrade. This sets a new record for the highest bug bounty ever offered, surpassing LayerZero’s $15 million reward.

However, this bounty includes several caveats, and Uniswap will only offer a full payout to a “critical” vulnerability that doesn’t include third-party contracts or applications.

Uniswap v4’s Bug Bounty

Uniswap recently offered a substantial bounty for identifying code vulnerabilities. Specifically, the firm is looking for weaknesses in its massive v4 upgrade’s core capabilities. Uniswap also released a blog post with further details about the program:

“Today, we’re excited to launch a $15.5 million bug bounty, the largest in history, for vulnerabilities found in Uniswap v4 core contracts. Uniswap v4 is already among the most thoroughly reviewed codebases in DeFi, with nine independent audits. As deployment approaches, we’re taking an extra step to ensure v4 is as secure as possible,” the post read.

Strictly speaking, Uniswap’s claim to being the largest-ever “bug bounty” is somewhat ambiguous. In the past, certain platforms have offered large bounties to successful hackers, incentivizing them to return stolen funds. Last year, Mixin Network called their $20 million enticement to hackers a “bug bounty,” but the company slightly misused the term.

In this case, Uniswap only offers payments for identifying a weakness, not a ransom for actually exploiting it. In this genre, Uniswap’s $15.5 million offer is indeed massive: earlier this year, Solana offered only $1 million for a similar program. In other words, the company might view continued v4 security as integral to Uniswap’s continued success.

Alternatively, this substantial offer could come from a place of confidence. As mentioned, Uniswap carried out nine separate independent code audits and conducted a further $2.35 million security competition. Fortune claims that Uniswap chose $15.5 million to one-up LayerZero, which offered a $15 million bounty last year. This high reward, then, could just be a boast.

In any event, this massive reward comes with important caveats. First of all, a hacker cannot claim a vulnerability from any third-party contract or application, even those deployed by Uniswap Labs. Second, it can’t list any unfixed issues that previous audits identified. Finally, only a “critical” bug gets the full payment, with lower risks getting between $1 million and $100,000.

Bitcoin’s price decline over the past few days has led to a notable reduction in trading activity among US-based investors. As of this writing, the leading coin trades at $92,540, having shed 6% of its value in the past four days.

With strong resistance formed at the $99,000 price region, American investors have gradually reduced their coin holdings. 

Bitcoin Holders in the US Shy Away

CryptoQuant’s data has shown a decline in BTC’s Coinbase Premium Index over the past seven days. As of this writing, it sits below the zero line and at a seven-day low of -0.01.

This metric measures the price difference of Bitcoin on Coinbase compared to Binance. It tracks the trading activity of institutional and US-based investors, as Coinbase is a preferred platform for these groups. A negative value indicates that the coin’s price on Coinbase is lower than on Binance, suggesting weaker demand or selling pressure from Bitcoin US investors. 

Further, this trend of low buying activity among US investors is reflected in Bitcoin’s Coinbase Premium Gap. According to CryptoQuant, this metric has fallen to a seven-day low of -10.

It also measures the price difference between Bitcoin on Coinbase Pro (USD pair) and Binance (USDT pair). A positive gap indicates stronger buying pressure from Bitcoin US investors on Coinbase, suggesting increased demand. Conversely, a negative gap implies weaker demand from US investors. 

BTC Price Prediction: Downward Trend May Persist

On BTC’s daily chart, the Parabolic Stop and Reverse (SAR) indicator now shows dots above the price, confirming a downtrend. This is the first time the dots have appeared in this position since November 6.

The SAR indicator tracks an asset’s price trend by plotting dots above or below the price. Dots below the price suggest an uptrend, while dots above the price signal a downtrend.

Bitcoin currently trades at $92,540, which is 4% shy of the support level, formed at $88,630. If the downward trend continues, the coin risks breaking below this support level and falling to $80,159.

However, if market sentiment shifts and buying activity resumes, BTC’s price may reclaim its all-time high of $99,419.