Ethereum (ETH) has been on a significant rally, reclaiming the $2,500 mark and recording a 40% surge over the past week. This surge is fueled by several key factors, including a favorable technical chart pattern and the impending profitability of nearly 67 million ETH, which could further strengthen the bullish momentum.
Key Factors Driving Ethereum’s Price Rally:
Technical Pattern and Bullish Momentum: Ethereum’s price surge from $1,812 to $2,584 between May 8 and May 10 has created a powerful “triple white soldier” pattern, which signals increased buying pressure. This pattern is part of a larger rounding bottom formation that indicates a trend reversal from a two-year low. As Ethereum holds above $2,500, bulls anticipate a breakout with a price target of $4,570, which represents an 81% increase from the breakout point. Ethereum is currently trading above its 200-day Exponential Moving Average (EMA), a key pivot that reinforces the bullish trend.
Profitability of 67 Million ETH: A significant catalyst for the current rally is the fact that nearly 67 million ETH are nearing profitability. According to data, 6.61 million investors are on the verge of seeing their Ethereum holdings become profitable, with the price range between $2,360 and $2,557. As Ethereum continues to climb above the breakeven point, this large amount of ETH turning profitable could create strong support and fuel further bullish momentum. A move above $2,557 will officially mark these positions as profitable, strengthening the ongoing uptrend.
Liquidation Risks and Short Squeeze Potential: Ethereum’s price is also experiencing a surge in volatility due to significant short positions. According to the ETH Exchange Liquidation Map, a 3% price movement could lead to a forced exit of short positions, potentially triggering a short squeeze. If Ethereum continues its bullish trajectory and rises by 3%, it could trigger up to $786 million in short liquidations, driving further price action. On the flip side, a 3% drop could trigger a $715 million long liquidation, adding further volatility.
Potential Price Targets and Risks:
The immediate price target for Ethereum is the psychological $3,000 mark, with analysts forecasting that a potential rally could push prices even higher toward $4,570 in the longer term. However, if Ethereum drops below key support levels around $2,430 (near the 200-day EMA and 50% Fibonacci retracement level), the uptrend could be invalidated, and a retest of the 100-day EMA at $2,144 may occur.
Conclusion:
Ethereum’s current rally, fueled by a strong technical setup, the profitability of a large ETH supply, and the potential for a short squeeze, positions ETH for a potential breakout toward $3,000 and beyond. However, traders should remain cautious of short-term corrections that could test key support levels.
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