Key takeaways:
Ethereum couldn’t surpass $4,800, experiencing a 3% decline due to a bearish divergence.
Spot selling pressure increased, yet leveraged traders remain engaged.
A bounce from $4,400 may rejuvenate bullish momentum towards new highs.
On Monday, while Bitcoin (BTC) reached a new all-time high, Ether (ETH) struggled to break its resistance at $4,800, leading to a significant 3% drop below $4,500 on Tuesday. This price decline stemmed from a bearish divergence on the four-hour chart, indicating a loss of buyer strength, usually signaling a local peak or short-term reversal.
ETH revisited the $4,500 mark, with onchain and derivatives data providing mixed signals. Although spot cumulative volume delta (CVD) dropped significantly, hinting at increased net selling pressure in the spot market, futures open interest and futures CVD remained high. This indicates that leveraged traders continue to act and prepare for volatility, even amid profit-taking by spot buyers.
Such scenarios often draw in sidelined traders looking for liquidity-driven entry points rather than impulsive actions. A possible liquidity sweep near $4,400, where stop orders typically accumulate, might serve as a short-term reset. A robust rebound from this zone would negate the bearish outlook and indicate renewed bullish momentum this week.
Conversely, if ETH fails to protect this level, the correction could extend towards $4,250 to $4,100, where a four-hour and one-day order block converge. These overlapping zones generally indicate high-demand areas where significant buy-side orders were placed, making them pivotal for potential trend reversals.
Related: XRP experiences highest ‘retail FUD’ since Trump tariffs: Is a major sell-off imminent?
“Liquidity lag” for Ether may be diminishing
XWIN Research reports that the US M2 money supply, a liquidity measure, has reached a record $22.2 trillion. While Bitcoin has jumped over 130% since 2022, spurred by this liquidity influx, Ether has risen only 15%, pointing to a “liquidity lag.”
However, multiple onchain metrics suggest that Ether may be catching up. Exchange reserves have decreased to approximately 16.1 million ETH, a drop of over 25% since 2022, signifying a continual reduction in sell-side pressure. Negative net exchange flows indicate that ETH is being moved into self-custody and staking, limiting available supply.
Crypto trader Skew pointed out that the recent rally marked the “fourth tap” of the $4,700-$4,800 area. If ETH can maintain this zone, “that would be quite bullish.” Otherwise, a deeper retracement could establish a higher low, potentially paving the way for the next upward movement.
Related: Altcoin values increase as USDT dominance decreases: Is ‘altseason’ upon us?
This article does not provide investment advice or recommendations. Each investment and trading decision carries risk, and readers are encouraged to conduct their own research.
