Ethereum prices have rallied over the past few days as investors continued to buy in anticipation of spot ETF approval later this year. ETH is approaching the psychologically important resistance point of $2,400, which is about 10% above this month’s lowest point.
short sellers were liquidated
Ethereum’s rally led to significant liquidations of short sellers. Total short liquidation surged to more than $15.9 million on Tuesday, the highest amount since January 12 of this year, according to CoinGlass data.Most of these liquidations occurred on Binance and OKX, the two largest crypto exchanges. In the industry. This number would likely have been higher if we included Coinbase, a US exchange that is not included in CoinGlass’ calculations.
The short liquidation amount of $15.93 million was much higher than the $1.5 million of bull stocks liquidated. In most cases, a significant increase in short liquidations is considered a positive thing for cryptocurrencies. This happens because in such cases, some of the liquidated traders tend to move in the opposite direction and buy coins.
The largest liquidation of Ethereum short sellers occurred on January 10th of this year when the SEC approved 11 spot Bitcoin ETFs. This approval caused Ethereum to rise significantly from $2,347 to a high of $2,640.
Cryptocurrency fear and greed recede
Ethereum’s price action this week comes at a time when the crypto fear and greed index is in a major retreat. The index has retreated to its neutral point of 56, well below its year-to-date high of more than 80, according to data compiled by CoinMarketCap.
This is an important indicator that provides detailed information about investor sentiment in the cryptocurrency market. Look at social media mentions, volatility, dominance, trends, and more.
The sharp decline in the index is also consistent with the relatively low volume of cryptocurrencies traded on exchanges. According to the data, the trading volume of cryptocurrencies exceeded $44 billion on Tuesday. While this is a large number, it is still significantly lower than the year-to-date high of $87.7 billion that occurred after the SEC approved Bitcoin ETFs.
Historically, the volume of a cryptocurrency usually goes through phases and also corresponds to the overall price. In this case, volume is down as Bitcoin is still well below its year-to-date high of $49,000.
There are two main factors that could cause Ethereum’s price to rise in the coming months.
Spot Ethereum ETF Approved
A likely trigger for Ethereum prices is the possible approval of a Spot Ethereum ETF by the Securities and Exchange Commission (SEC). Several companies have applied for the fund, including Blackrock, Grayscale, and Ark Invest. They hope the SEC will use its priority rights over Bitcoin to approve it. Moreover, Ethereum is the second largest and most liquid virtual currency in the world.
However, the risk is that Ethereum and BTC are very different. Bitcoin is a proof-of-work (PoW) coin, while Ethereum is a proof-of-stake coin with staking functionality. The SEC believes these staking features are problematic because ETH is unregulated.
Bitcoin reaches halving
Another potential trigger is the upcoming Bitcoin halving in 60 days. For most periods, cryptocurrencies tend to rise prior to this halving event. This situation is also notable in that it coincides with expectations for interest rate cuts from the Federal Reserve. Therefore, these factors could push ETH higher.
Additionally, ETH has several supporting technologies. First, the coin remains above its 50-day moving average and 25-day moving average, and is about to break above the key resistance level at $2,445, the December 28th high. Above this price, ETH will rise sharply and become more likely to retest its year-to-date high of $2,700.