Ethereum (ETH) has shown impressive upside momentum in the past few weeks, thanks to a short squeeze and bullish technicals. The cryptocurrency's price has experienced a notable surge, leading to speculation about its potential to overcome key resistance levels and reach new all-time highs. According to on-chain data and technical analysis, a correction may be due. Investors need to be on their toes to fully take advantage of what could be a sea change.
Ethereum's Price Rally and Short Squeeze
During the last two weeks, Ethereum has made impressive gains as speculation and real investors confidence returns bullish ETH market. Ethereum price skyrocketed from $2,111 on June 12 to $2,515 on June 25—a significant turnaround. This massive increase is due in large part to a short squeeze. When the price goes up, traders who short the crypto have to buy it back in order to cover their positions and stop the bleeding—and the price drives even higher.
Ethereum’s rising funding rates add credence to the short squeeze theory. Funding rates are periodic payments that existing traders pay to or receive from new traders. In particular, these payments approximate the difference between the perpetual contract price and the spot price. When funding rates are positive, it’s long positions which are paying short positions. This indicates that an increasing number of traders are betting on Ethereum’s price appreciation. This self-reinforcing dynamic can magnify the impact of any price increase, creating a frenzy as short sellers race to cover their positions.
Technical Indicators and Potential Breakout
Ethereum’s recent price action has caught the eye of chart watchers and technical analysts. The authors honorably flesh out several indicators that point to a potential TNC breakout around the corner. Importantly, Ethereum just made a golden cross on the daily chart. A golden cross occurs when a short-term moving average crosses above a long-term moving average. This very bullish technical pattern suggests a change in momentum may be brewing.
The formation of a golden cross has many investors pumped. A growing number of Ethereum bulls now think ETH is poised to leap toward new all-time highs. For Ethereum to continue its bullish trend, analysts have pegged the $3,000 level as key support. If Ethereum manages to decisively reclaim this resistance, it may open the door for ETH to see some massive gains. This shift could even launch Ethereum into new, unexplored territory. The coming together of positive technical indicators and increasing investor optimism has set up a very bullish environment for Ether.
On-Chain Data and Potential Correction
Despite the extremely bullish sentiment surrounding Ethereum, the on-chain data is saying a short-term correction is due. Within a three-day period, an impressive 177,000 ETH was sent to Binance, the world’s largest crypto exchange by trade volume. This record activity of ETH flowing onto an exchange is a red flag, pointing to future selling pressure.
Technical analyst Crypto Wave has warned that Ethereum seems poised to retest the $1,700 to $1,950 zone. This forecast is based on technical analysis and price history. More importantly, they suggest that Ethereum has some recalibrating to do before it can resume its upward trajectory. Investors should not bet the ranch and they would be wise to be prepared for volatility in the near-term.
