Ethereum’s Major Buying Points
In Ethereum, there have been six major buying points since 2023. The second largest liquidation of long positions occurred on January 12, coinciding with the approval of spot Bitcoin ETFs and causing a significant price correction.
Recent analysis shows that the liquidation of long positions has set a tail low at $2,450. If this price is breached and swiftly recovered, it may suggest an imminent rebound. However, if there is an inability to recover, it could indicate a change in sentiment and increased downside volatility.
Critical Inflection Point for Ethereum
According to CryptoQuant’s analysis, large futures liquidations often result in longer-tailed candlesticks, indicating significant buying activity from market whales alongside the liquidation of long positions.
The low point of these candlesticks becomes crucial as it represents extreme market sentiment. The aftermath of such situations plays a vital role in determining the direction of the price trend. A cascade of liquidated long positions causing downside volatility can lead to a sharp shift in market sentiment. On the other hand, if the price holds and rebounds, it reassures investors and encourages further buying activity.
Looking at specific instances in September-October, November, and December 2023, substantial long positions were liquidated, and breaking the tail lows momentarily resulted in a market bounce-back.
“The tail low of the recent mass long position liquidation is $2.45k, so if we break that price and recover right away, we’re likely to see a bounce, and if we break it, we’re likely to see a shift in sentiment and downside volatility.”
Ethereum Bulls Prevail
Ethereum is currently trading above $2,515, experiencing a slight decline of 1.19% over the past day.
The supply of Ethereum on crypto exchanges has been steadily decreasing and is approaching an all-time low, indicating optimism among investors.
Furthermore, Ethereum’s market dominance over Bitcoin has significantly increased, with a surge of 22.4% recorded in the past week alone.
Hot Take: Ethereum’s Potential Rebound
Ethereum’s recent liquidation of long positions and the subsequent tail low at $2,450 indicate a critical inflection point for the cryptocurrency. If the price can break this level and recover quickly, it suggests a potential rebound in the market. However, if the price fails to recover, it may lead to a shift in sentiment and increased downside volatility.
The ongoing trading above $2,515 and the decreasing supply of Ethereum on exchanges paint an optimistic picture for bulls. Additionally, Ethereum’s rising market dominance over Bitcoin further supports a positive outlook for the cryptocurrency. Keep a close eye on Ethereum’s price movements as they may provide valuable insights into the future direction of the market.
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