Ethereum Price Corrects 5% Amid $170M in Liquidations

The Ethereum network has seen significant weakness in recent weeks, with the ETH price experiencing a 5% correction on Tuesday. This move triggered $170 million in liquidations of bullish leveraged positions, putting traders on alert.

One reason for this correction is the negative funding rates on ETH futures contracts. The perpetual futures annualized funding rate has been deeply negative, meaning shorts (sellers) paid to keep their positions open. Currently, it stands at 3%, a level that signals a lack of confidence from bulls.

The broader cryptocurrency market capitalization has also seen a decline of 17% over the past 30 days, with Ether price experiencing an even sharper drop of 20%. Investors' fear over ongoing peace negotiations between the US and Iran, as well as high costs of artificial intelligence build-out, have contributed to this caution.

Despite the challenges facing the Ethereum network, it remains well-placed for a recovery due to its dominance in decentralized finance (DeFi) with a 53% market share. The upcoming Glamsterdam protocol upgrade is expected to reduce centralization by splitting block creation while improving security and execution efficiency through parallel transaction processing.

However, concerns remain about the publicly listed company BitMine's (BMNR US) $9.3 billion in unrealized losses on its ETH reserves. This has likely deterred institutional investors' appetite for Ethereum. Additionally, US-listed Ether spot exchange-traded funds (ETFs) have posted net outflows for six consecutive weeks, undermining traders' sentiment.