Ethereum price was not spared by a gust of headwinds that swept across the crypto market on Tuesdays. Crypto prices generally dropped by 3.3% in 24 hours, with the market cap at $2.27 trillion. The largest crypto, Bitcoin, plunged below $62,000 despite Nasdaq filing with the SEC for approval to offer BTC index options.
Ethereum Price Market Movers: Strong Derivatives, Slowing Network Growth, Ether ETFs Persistent Drop
Ethereum price exchanged at $2,571 during US business hours amid calls for an immediate reversal toward $3,000. Derivatives analysis reveals strong fundamentals behind ETH price, starting with Coinglass data on open interest.
A subsequent uptrend in the futures volume to $26.46 billion adds credence to the bullish outlook unfazed by the rapid price drop. According to crypto analysts and trader Adam, the uptick in OI and the funding rate drop indicates perps shorting and directional positioning. At the same time, the CVD divergence amid the downtrend signals an influx of market sell orders. All these factors considered, Ethereum price could be gearing up for a robust short-squeeze, leading to a major run to $3,000.
ETH is setting up for one of the cleanest short-squeeze trades I have seen in a while.
So once the level hits or we start to see some sort of strength/mean-reversion, make sure to long Solana or anything else that actually goes up. pic.twitter.com/xX3Rhz4NAq
— adam (@abetrade) August 27, 2024
However, the number of new Ethereum users has dropped to 68.2k addresses matching levels last seen in November 2023, according to Santiment. This is particularly concerning considering a spike to approximately 197k new addresses in May 2024. A persistent decline in this metric means that demand for Ethereum is reducing and, in the process, depriving ETH price of the momentum to sustain an uptrend.
Ethereum network growth
Ethereum ETFs posted another net outflow on Monday, summing to $13,23 million. Per SoSoValue data, the products allowing investors to seek exposure to ETH on stock exchanges have since August 15 recorded net outflows signaling negative sentiment and the lack of confidence in the market.
Ethereum ETF stats | SoSoValue
ETH Price Analysis: Can Bulls Come Out On Top?
Ethereum price bulls seem to be battling a losing short-term battle, considering the formation of a bear flag pattern in the daily range. On the upside, the asset could face resistance at the 20-day Exponential Moving Average (EMA) at $2,700, the $50-day EMA at $2,890, and the 200-day EMA at $3,021.
The Relative Strength Index (RSI) retracement in the neutral region heading toward the oversold area affirms the sellers’ grip on Ethereum price. A 17% drop from the current market value will be anticipated if the flag pattern is validated by ETH breaking the channel’s support. In that case, ETH may retest early August support at $2,100.
ETH price chart | Tradingview
Nevertheless, Ethereum price forecast suggests that short-term support at $2,500 and the channel’s support could immediately annihilate the continued correction chances. An increase in short positions could also create a perfect squeeze, guiding Ether price to $3,000 and higher.
The post How Perfect Short Squeeze Could Launch Ethereum Price to $3,000 appeared first on CoinGape.