Ethereum’s recent rejection at the key resistance region of the 100-day MA level suggests a false breakout and a potential short-term correction.

However, a break above this threshold could trigger a bullish surge toward $3K. The price is expected to consolidate, with $2.4K as a critical support level.

Technical Analysis

By Shayan

The Daily Chart

Ethereum has recently seen a notable increase in demand and bullish momentum, causing the asset to test and slightly breach the decisive resistance region formed by the 100-day moving average at $2.7K and the inverted head and shoulders neckline at $2.6K. Despite this brief breach, ETH quickly faced rejection due to significant supply at this level, causing the price to plummet below the 100-day MA.

This false breakout hints at a bull trap, signalling a potential period of descending consolidation correction in the short term. Ethereum is trading between the 100-day MA and the $2.5K support region, with a breakout above this resistance likely to signal a sustained bullish trend.

The 4-Hour Chart

On the 4-hour chart, Ethereum surged toward the critical resistance zone bounded by the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci retracement levels, representing a significant barrier for buyers. A breakout above this range could lead to massive short liquidations and a further price rally. However, the recent price action indicates intense selling pressure near this area, resulting in a rejection and a halt in bullish momentum.

If this selling pressure persists, Ethereum will likely enter a period of mid-term consolidation correction, targeting the lower boundary of the flag pattern around the $2.4K threshold. Conversely, if buying pressure resurges and the price breaks through the $2.7K resistance, the next target will likely be the $3K substantial resistance, which also coincides with the 200-day moving average.

Onchain Analysis

By Shayan

The Estimated Leverage Ratio is an essential metric for gauging the risk participants in the futures market are willing to take by using leverage. A rising ELR typically signals an increase in leveraged positions, which can amplify market moves in either direction.

The metric has increased over the last few months, coinciding with an overall price downtrend. This suggests that more traders are opening high-leverage short positions, betting on further price declines for Ethereum. The market appears bearish on ETH’s upcoming prospects, with many expecting further downside.

With leverage at concerning levels, the futures market is now considered overheated. This leaves Ethereum vulnerable to a potential short-squeeze event.

In such a scenario, if ETH rises unexpectedly, traders with short positions could be forced to cover their positions by buying back ETH, creating an impulsive price spike. The 100-day moving average at $2.7K is a key resistance level. A breakout above this level would likely lead to massive short liquidations, increasing ETH’s price.

Bitcoin’s price has yet to reach a new all-time high amid the recent bullish run, as the sellers are defending their last line of resistance.

Technical Analysis

By Edris Derakhshi (TradingRage)

The Daily Chart

On the daily chart, the asset has recently rallied above the $64K level and the 200-day moving average, located around the same area. This uptrend has significantly boosted the probability of Bitcoin creating a new all-time high soon.

Yet, the sellers have defended the $69K resistance level well, as the price is getting rejected to the downside. A retest of the 200-day moving average is possible if a significant pullback occurs.

The 4-Hour Chart

The 4-hour chart indicates a clear bearish signal based on price action and momentum analysis. The market has recently created a rising wedge at the key $69K resistance zone. Yet, the RSI has displayed a clear bearish divergence with the recent price highs.

This has led to a breakdown of the pattern, which is a classic bearish reversal signal. The RSI also shows values below 50%, which shows that momentum is bearish in the 4-hour timeframe. Yet, there’s still a high probability that this move is just a temporary correction, as the overall market structure remains bullish.

Sentiment Analysis

By Edris Derakhshi (TradingRage)

Bitcoin CME Options Open Interest (Stacked)

Amid Bitcoin’s recent price rise, investors are becoming increasingly optimistic that a new record high and long-term rally will soon occur. Yet, there is a slight chance that this optimism might lead to the market’s downfall.

This chart demonstrates the Bitcoin CME Options Open Interest (Stacked), which measures the number of open options positions, both calls and puts. Evidently, there’s a notable decrease in aggregate options open interest (OI) compared to the levels seen earlier in the bull market and near the market bottom, where both calls and puts were more heavily stacked.

This reduction in OI suggests that investors are experiencing less uncertainty about Bitcoin’s price movements, leading them to take on more directional positions with less need for hedging through options. At the same time, the increasing open interest in CME futures indicates that investors are becoming more confident in the trend, willing to take more leveraged positions and assume more significant risks. Needless to say, leverage is a two-edged sword.

As the US presidential race becomes more intense with less than a month away until Election Day, data from last week suggests that digital asset inflows have surged to $2.2 billion.

This figure marked the highest level since July, spurred by optimism for a potential Republican success in the election.

Inflows Surge Amid US Election Optimism

According to the latest edition of CoinShares’ Digital Asset Fund Flows Weekly Report, the trading volumes of investment products have surged by 30%, resulting in price appreciation, bringing total assets under management close to the $100 billion mark. The distribution of these inflows, however, varied greatly by region. The United States was a clear leader for the week, recording inflows of $2.3 billion.

The digital asset manager stated,

“We believe this renewed optimism stems from growing expectations of a Republican victory in the upcoming US elections, as they are generally viewed as more supportive of digital assets.”

Australia also saw a modest inflow of $1.4 million and emerged as the only other country to experience a positive flow. On the other hand, almost all other nations recorded minor outflows, with Canada, Sweden, and Switzerland leading with $20 million, $18 million, and $15 million outflows, respectively.

Additionally, Brazil and Germany also experienced outflows of $9 million and $6 million, while Hong Kong had a minor outflow of $1.5 million during the same period.

Bitcoin Leads While Multi-Asset Products Face Setback

Bitcoin led the market with inflows totaling $2.13 billion over the past week. The price increase also sparked interest in short-bitcoin products, which attracted $12 million. Interestingly, this was the largest inflow since March. Ethereum, too, benefited, recording $58 million in inflows.

Several altcoins followed suit, with Solana pulling in $2.4 million, Litecoin seeing $1.7 million, and XRP bringing in $700,000. Contrastingly, multi-asset products faced weekly outflows of $5.3 million, bringing an end to their impressive 17-week streak of continuous inflows.

Cardano and Binance also recorded outflows of $1.5 million and $0.8 million respectively.