Ethereum Faces 3% Dilemma: Can ETH Sustain Above $2.5K or Drop to $2.3K?
Ethereum has recently witnessed a substantial price increase, as it approached the critical resistance level of $2,500. The question now remains whether the bullish momentum will persist or if the bears will seize control of the market.
The cryptocurrency experienced a significant pullback at the beginning of the last week of August, erasing most of the gains made earlier in the month when it tested the $2,700 mark. However, the tone shifted as September began, with ETH surging over 3% in the past 24 hours, reaching $2,521 at the time of writing.
Despite the price surge, the altcoin season index declined, indicating a lack of strong investor confidence in the current bullish trend.
An analysis of the ETH exchange reserves revealed a notable increase, suggesting the start of a distribution phase. This spike in reserves indicates that more traders are taking advantage of the recent surge by moving their profits to exchanges before the hype subsides.
Each time ETH has approached its resistance levels in the past, there has been a corresponding rise in exchange reserves. For example, when ETH tested the $4,050 resistance in March, exchange reserves increased from $19.5 million to $20.8 million. A similar pattern was observed when ETH broke above the $2,800 ceiling last month.
Despite the recent surge, the lack of a significant increase in Open Interest among Futures traders may indicate that the true value of ETH has not yet been realized. Long-term holders have been consistently selling their aged coins, signaling a bearish trend.
The recent 3% surge in ETH may have been a bluff, resulting in $34 million in short liquidations and pushing the cryptocurrency to test the crucial $2,500 level. However, without a surge in buying activity, ETH could face around $40 million in long liquidations if it drops below the $2,500 support level, potentially retracing its price back to $2,300.
In conclusion, the future of Ethereum’s price movement remains uncertain, with the need for increased buying activity to sustain a bullish trend.
