Ethereum is in a challenging phase of the market, with the price facing constant selling pressure despite a tightening supply landscape. On the charts, ETH has shown signs of weakness, with repeated rejections at key resistance levels and a decline in momentum, suggesting that sellers will maintain control in the compact term. Much of the ETH supply remains locked in staking contracts, effectively reducing the amount of liquid ETH available in the market.

Locked supply continues to limit circulating Ethereum

Ethereum is experiencing selling pressure on the charts, but supply is being locked in by staking. An analyst known as Sjuul AltCryptoGems on X he noticed that according to reports, almost 3 million ETH is waiting to be staked, and the queue to enter stretches to about 50 days.

Simultaneously, output queue is almost empty, indicating that very few participants are withdrawing their shares, which is a clear imbalance. If confidence were frail, output activity would raise and demand for assets would leisurely, but the opposite is true.

Investors continue to lock up their ETH for months at a yield of around 2.7%. The total amount staked has now exceeded 38 million ETH, representing over 31% of the total supply, and this number continues to grow despite the lower price trend.

This discrepancy highlights a key animated. While ETH price shows weakness, network share signals strength. The waiting time to enter staking is long and there is almost no time to exit. This disconnect doesn’t last long. Right now, supply is being locked out of circulation while demand is rising.

How long and compact positions in Ethereum are shrinking across the board

Ethereum’s recent price weakness may be largely due to a shift in positioning among hedge funds. According to for crypto trader CW, data shows that hedge funds significantly reduced their long ETH positions about two weeks ago, particularly in Coinbase derivatives, suggesting that many of them either liquidated their holdings or exited trades to limit losses.

This wave of unwinding of long positions has increased significant selling pressure, with US hedge funds becoming the main force currently influencing the market. There is a shift in sentiment that contrasts with that of other participants as dealers and asset managers are largely neutral or continue to hold a slight advantage in long positions. CW argues that significant full-scale growth will begin when hedge funds start to grow.

Both long and compact Ethereum activity decreased compared to the previous day. CW too excellent that highly leveraged long positions are estimated at approximately $1.1 billion, while compact positions significantly outweigh them at approximately $4.22 billion. However, if the price of ETH increases by $100, several compact positions will be liquidated.