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.