After suffering a significant decline early last week, Ethereum (ETH), the second-largest cryptocurrency, has staged a modest recovery, reclaiming the crucial $2,600 level and aiming for the $3,000 mark again.
August 5th accidentwhich saw the price of Ethereum drop to $2,112, marked the market’s biggest decline of the year. However, the digital asset has since rebounded, up 8% over the past seven days, suggesting the possibility of a more sustained uptrend.
Massive Ethereum Liquidations Trigger Bullish Signals
According to a recent report by market analysis firm CryptoQuant on ETH price action, the chart below highlights a substantial liquidation of long perpetual positions in the futures market that occurred during last week’s crash.
The firm notes that in sustained bull markets, such a large liquidation event is often followed by a major price rally as the futures market stabilizes and spot buying pressure takes over.
Related Readings
“The recent cascade has triggered massive liquidations of long positions, reaching levels not seen since November 2022,” the firm noted. “This substantial liquidation likely indicates a cooling in the futures market, where many leveraged positions have been liquidated. Such a development may pave the way for renewed interest in the futures market.”
With the futures market potentially resetting, CryptoQuant believes that if demand returns, Ethereum could be poised for another impulsive longer-term bullish push that could send prices above previous all-time highs.
ETH Price Hits $3,000
Crypto analyst Caleb Franzen echoed a similar prediction for ETH’s price in a social media post on Platform X (formerly Twitter), suggesting that if Ethereum can break above the $2,725 level, it could signal a strong move higher.
Franzen’s analysis of 4-hour candlesticks and market structure indicates a series of higher lows and a bullish reading on supertrend indicators, further fueling the optimism surrounding Ethereum’s future performance.
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However, with ETH currently trading at $2,645, the first resistance on the ETH/USDT weekly chart, located at the $2,700 level, has proven to be the first hurdle to overcome for the second-largest cryptocurrency in recent days.
In a scenario where the current rally extends into the coming weeks and ETH price attacks the level highlighted by Franzen, the $2,900 and $2,990 resistance walls would be the last obstacles to reconquering the $3,000 level.
Conversely, the token will need to secure and consolidate above the $2,550 level to avoid further declines towards the next support on the daily chart, currently located at the $2,345 level after its 25% correction.
Featured image of DALL-E, chart from TradingView.com
