Ethereum has officially embarked on a new chapter after surpassing its previous all-time highs and venturing into uncharted waters. The recent upswing propelled ETH to $4,886, yet it fell short of the much-anticipated $5,000 threshold. While bulls showcase their resilience, the market now confronts a crucial juncture. Analysts are split: some predict Ethereum will continue its ascent into price discovery, while others caution against a potential deeper correction.
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This uncertainty arises amidst growing speculative behavior. As noted by CryptoQuant, a vital indicator called the Leverage-Driven Pump has flashed six times this month alone. Each occurrence signals a price increase driven by leverage in the derivatives market rather than solely organic spot demand. Historically, such indicators have yielded mixed results: some rallies quickly retraced, while others prolonged before succumbing to exhaustion.
With institutional accumulation bolstering long-term growth and derivatives adding fuel to short-term volatility, Ethereum stands at a pivotal point. Whether this phase serves as a springboard for a sustainable push above $5,000 or a setup for profit-taking will heavily depend on how leverage unfolds in the days ahead. The coming days could be critical for ETH’s future direction.
Ethereum Faces Risks Amid Strong Fundamentals
Top analyst Maartunn indicates that Ethereum has had its Leverage-Driven Pump indicator flash six times this month. Out of these signals, four experienced either partial or complete retracements, one continued its rise after stopping out shorts, and the most recent one remains active. Based on this trend, Maartunn suggests that Ethereum might soon retract again, as excessive leverage in derivatives markets typically creates unstable conditions leading to pullbacks.
Despite technical signals indicating short-term risks, the fundamentals remain broadly bullish. Ethereum has not only surpassed its 2021 all-time high of $4,860 but is also bolstered by substantial institutional accumulation. Companies like BitMine and SharpLink Gaming are purchasing ETH in significant quantities, locking up billions in supply. This trend diminishes available liquidity on exchanges, effectively enhancing scarcity during spikes in demand.
Another crucial element is the reduction of ETH balances on centralized exchanges, revealing that investors prefer to hold or stake their coins rather than engage in active trading. This outflow aligns with long-term accumulation behavior, historically a precursor to major price rallies.
While volatility induced by leverage may lead to momentary retracements, Ethereum’s market structure appears geared towards continuation. If institutions persist in accumulating and supply continues to diminish across exchanges, ETH could maintain momentum and push far beyond its 2021 highs in the forthcoming months.
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Daily Chart Signals Critical Moment
Ethereum’s daily chart reveals ETH trading at $4,771, maintaining stability following a volatile rally that tested new all-time highs last week. The chart illustrates a distinct bullish structure, with ETH recording higher highs and higher lows since mid-July. The 50-day moving average remains beneath the current price at $3,763, while the 100-day and 200-day averages stand at $3,146 and $2,616, respectively. This significant gap signifies strong momentum, yet it also underscores how extended the market has become in the short term.
The recent spike, which briefly dipped ETH below $4,200 before a robust rebound, indicates strong buyer interest at lower levels. The recovery candle suggests that bulls quickly absorbed selling pressure, placing ETH into a tight consolidation just beneath the psychological $5,000 threshold. A convincing break above this level could pave the way for rapid advancement into uncharted price territories.
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Nevertheless, volatility remains high. Sharp moves typically follow such vigorous expansions, and retracements toward support at $4,500 or even $4,200 are plausible. Traders will be keeping an eye on sustained closes above $4,800 as confirmation of bullish continuation, while any failure to hold key supports could trigger a more significant correction.
Featured image from Dall-E, chart from TradingView
