- Ethereum liquidity providers have reduced their long positions.
- ETH investors remained optimistic through 2025, despite heavy speculation.
For almost two weeks, Ethereum (ETH) has been experiencing strong fluctuations. During this period, ETH prices rose from $4,109 to $3,219. This price volatility has left altcoin trading behind.
These market conditions have analysts talking about Ethereum’s performance through 2025. To the extent, Cryptoquant analyst Sun Moon suggested strong performance for ETH in Q1 2025, citing the market stability.
Ethereum Liquidity Providers Reduce Long Positions
According to CryptoQuant, Ethereum liquidity providers have reduced their long positions. When entities and traders that provide capital to ETH reduce their long positions, it indicates a change in sentiment.
If liquidity providers reduce their exposure, the market may struggle to maintain upward momentum without further buying pressure.
Source: CryptoQuant
The analyst further noted that despite the change 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 sales.
Therefore, until 2025, ETH follows the same pattern as last year. In December 2023, ETH prices rose from $2,045 to $2,448 before the correction and then declined to $2,259 by the end of the year.
Starting in January 2024, prices rose from $2,281 to $2,717 and then followed a 2-week consolidation before a sharp rise to $4,090.
Therefore, if prices follow the same pattern, and if history is anything to go by, ETH prices will see a sharp rise. As the analyst noted, the price of Ethereum will increase significantly in the first quarter of 2025.
What this means for ETH
Although Ethereum liquidity providers have reduced their long positions, ETH is still seeing significant demand for long positions amid high speculative activity.
As such, according to AMBCrypto’s analysis, Ethereum is currently experiencing a leverage-driven market.
Source: CryptoQuant
First of all, this is demonstrated by the fact that the estimated leverage ratio has seen a sustained increase. Over the past month, the ELR has increased from 0.4 to 0.56.
This upsurge reflects increased speculation, with investors more willing to take risks with borrowed funds in order to maximize potential gains and losses.
Source: Santiment
Additionally, Binance’s funding rate has remained positive over the past month.
This shows that even though liquidity providers continually reduce their capital inflows, traders still expect prices to rise and demand for long positions remains high.
ETH, until 2025
Simply put, even if liquidity providers reduce their funds, the demand for long positions remains high, as observed above. Therefore, ETH is still seeing strong speculative activities.
Although speculative market activity can cause prices to collapse, it can also cause prices to rise in the short term.
By 2025, the Ethereum market will need to strengthen its fundamentals and rely less on a speculative market, as it is prone to corrections.
Read Ethereum (ETH) Price Forecast 2025-2026
Therefore, with demand for long positions still high, this suggests that the market is still bullish and ETH enters 2025 with positive sentiment.
If the bullish sentiment persists, ETH will break out of the $3,500 consolidation range and challenge $4,000 where it has faced multiple rejections. However, if the speculative bubble bursts, ETH could fall below $3,000.
