|
Getting your Trinity Audio player ready...
|
Key Takeaways:
- ETH has surged 27.4% in a week, nearing a critical resistance zone at $3.8K–$4.1K.
- Overheated indicators and a derivatives-heavy market suggest caution despite ongoing whale accumulation and ETF inflows.
- A consolidation phase is likely, unless triggered lower by broader crypto market shifts, particularly from Bitcoin.
Ethereum [ETH] is testing key resistance levels after a powerful 27.4% rally over the past week. However, several market signals suggest the second-largest cryptocurrency might face headwinds in sustaining its bullish momentum. From overheated on-chain metrics to a derivatives-dominated market, ETH bulls could be walking on thin ice.
RSI and Profit Levels Signal Exhaustion
Ethereum’s recent rally pushed 95% of its circulating supply into profit—a historically cautionary signal. Additionally, while the Relative Strength Index (RSI) has yet to cross into overbought territory, its rapid rise indicates the potential for short-term overheating.
These signals, combined with consistent daily gains, point to a market ripe for profit-taking. While this doesn’t confirm an immediate reversal, it suggests that upside momentum could be capped in the short term.
ETF Inflows and Whale Accumulation Still Support Price
Despite these warning signs, spot Ethereum ETF inflows have surged, providing strong bullish undercurrents. Large holders or “whales” have also continued accumulating ETH, lending long-term support to the asset’s valuation.
These trends could serve as a cushion against a steep correction. However, the market’s dependence on derivatives over spot activity raises concerns about sustainability.
Derivatives Dominate, Raising Bubble Fears
Derivatives have overtaken spot markets in ETH’s daily volume, highlighting elevated speculative activity. A surging basis—reflecting the gap between futures and spot prices—suggests strong demand for leveraged long positions. While this fuels rapid price growth, it also raises the risk of a sharper correction if sentiment shifts.
Without continued spot demand, the current rally risks becoming a short-lived bubble.
According to liquidation heatmaps from Coinglass, Ethereum faces strong resistance around $3.8K to $4.1K—zones that may magnetize price action and trigger volatility. The $4.1K mark was last tested in December 2024 before a long-term bearish reset.
Also Read: Ethereum Price Soars 57% as ETF Inflows Hit Record $726M — All-Time High in Sight
To the downside, support lies near $3.5K and $2.8K. However, unless Bitcoin [BTC] experiences a sharp correction below $116K, these lower zones might remain untouched for now.
While Ethereum’s fundamentals remain strong, technical and on-chain signals suggest a cooling-off period might be near. As the $4K resistance looms, traders should brace for potential consolidation or a modest pullback before the next major move.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
