Ethereum exchange reserves drop dramatically signaling a supply shock, ETH
Image Source: Nairametrics

Ethereum closes gap with all-time highs but long positions dip

Ethereum closes the gap with all-time highs as the price of the coin is above $4,700. Things look super bullish for Ethereum from the outside, but there are some concerning factors as well. The spot market looks good, but the derivatives are giving mixed signals whether to be bullish or not. Also, note that Ethereum’s price movement has been decoupled with BTC’s sideways trajectory, which could also be a problem in some ways.

Why should you not be overly bullish for ETH in the short term?

Ethereum is currently forming a downward channel in the 12 hr chart, which puts the next support at $3,960. So, if it is unable to break out from this channel, we could see a significant pullback. At the same time, taking a look at the derivatives market, it is evident that there aren’t many long positions. The funding rates of exchanges show that while things are bullish, we are still not in the greed zone where a lot of long positions are opened.

Ethereum closes gap with all-time highs
Image Source: Financial Watch

Another metric we should look at is the trading data from top exchanges. It seems that despite the recent price rally of Ethereum near its ATH, traders are reducing their long positions. And these are not small or retail traders; we are talking about whales and professionals who have good volume. So, this is likely an area of concern.

Eth breakout unlikely

I am not a professional analyst, but in the past year, I have observed that whenever ETH decouples with BTC and moves up in the next few days, it comes down again. An important thing to note here is that the price of Bitcoin must come down as well for this to happen. Overall, I am very bullish about Ethereum, but until BTC moves above $60k, it is unlikely that we will see $5k Ethereum. We can also expect some consolidation in Ethereum’s price in the short time frame, which will again depend on how Bitcoin moves.

What are your thoughts as Ethereum closes the gap with all-time highs? Do you think we are about to see a correction soon, or is the rally going to continue? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.

Also Read: Plan B sets a $100k target for Bitcoin after November prediction fails.