After a sharp 27% drop in the past month, Ethereum (ETH) might finally be regaining its footing, hinting at a potential breakout to $4,000. The cryptocurrency recently bounced off the $3,053 mark, showing signs of bullish momentum that may shape its future price movement.
Signs of a Bullish Rebound for Ethereum
Despite its recent decline, Ethereum’s Relative Strength Index (RSI) on the 12-hour chart shows a bullish divergence. This technical pattern suggests that selling pressure is fading, and a potential trend reversal could be ahead. After hitting its local low at $3,053, ETH has already climbed nearly 9%, signaling the potential for further upward movement.
Whale Activity and On-Chain Data Signal Strength
Ethereum’s large wallet holders, commonly referred to as whales, have shown renewed confidence. Just recently, holdings among these major players increased by 0.04 million ETH, equivalent to $134 million. While not aggressive accumulation, this activity highlights growing optimism in the market.
Furthermore, the Net Unrealized Profit/Loss (NUPL) ratio has dropped to 0.27, indicating that most of the short-term holders who sold at a loss have exited. Historically, this level of the NUPL ratio often signals consolidation before a market recovery.
Potential Short Squeeze Could Propel Prices Higher
According to Bybit’s ETH/USDT liquidation data, over $1.2 billion in short positions are clustered between $3,320 and $3,740. If Ethereum continues its upward momentum, these short positions could be liquidated, creating a cascade of buy orders and further driving the price upward — a phenomenon known as a short squeeze.
Key Levels to Watch for Ethereum
Ethereum’s price is currently trading within a falling channel, reaffirming a broader bearish trend. However, the critical support at $3,053 has held firmly. To validate a rebound, Ethereum must close above $3,338, with the next significant resistance at around $3,799. Breaking beyond this level could spark a rally to $4,000 or even $4,260.
Traders should remain cautious, though, as a 12-hour candle closing below $3,053 would invalidate this rebound hypothesis and could result in further declines.
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Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are volatile, and readers should conduct their own research before making any decisions.
