Ethereum shines brightly: Crypto analysis of May 21, 2024

Just when Ethereum seemed on the verge of fading into oblivion, its price rebounded by almost 20%. Let's take a look at the future prospects for ETH.

Ethereum (ETH) price situation

After experiencing downward pressure pushing it up to $2,900, Ethereum price stabilized at this price level. It was not until the week of the final deadline for the approval of Ethereum spot ETFs by VanEck, 21Shares & ARK, that the volatility of the cryptocurrency increased. Fortunately for Ethereum, expectations, which became more optimistic on Monday, May 20, allowed the cryptocurrency to appreciate by more than 20%. Thus, Ethereum reached a resistance level of $3,700, as noted in the May 9, 2024 analysis.

At the time of writing, one Ether is worth $3,650. It therefore seems that the cryptocurrency is now stabilizing below its resistance level. These recent bullish fluctuations have allowed ETH to once again position itself above its 50-day moving average, which could reassure investors about the cryptocurrency's trend. On the side of Ethereum dynamics, we observe a notable recovery, as evidenced by oscillators and the price of Ethereum itself. All of these elements seem encouraging for the continuation of this movement.

The current technical analysis was carried out in collaboration with Elie FT, a passionate investor and trader in the cryptocurrency market. Today trainer at Family Tradinga community of thousands of own-account traders active since 2017. You will find Lives, educational content and mutual assistance around the financial markets in a professional and warm atmosphere.

Focus on derivatives (ETHUSDT)

While open interest in Ethereum-linked perpetual contracts was relatively stable, it jumped 40% in just a few hours. Given the market trend and the euphoria surrounding spot Ethereum ETFs, it is natural to think that speculators were primarily biased toward buying. This hypothesis is corroborated by a slight rebound in the funding rate, which reflects a price gap between ETHUSDT contracts and their underlying, likely due to increased pressure on the latter. In terms of liquidations, we observe the appearance of forced closings of long and short positions, reflecting the recent volatility of Ethereum.

The three-month ETH/USDT liquidation heatmap reveals that the liquidation zone between $3,600 and $3,700 was frequently reached, leading to a period of consolidation. Currently, cryptocurrency appears to be in a period of indecision. Now, the most significant liquidation zone is above the current price, notably around $4,100. Below the current price, the $3,000 and even lower $2,850 areas are also worth watching. Price approaching these levels could result in a massive triggering of orders, increasing the risk of a period of heightened volatility for Ethereum. These areas therefore represent a crucial point of interest for investors.

Hypotheses for the price of Ethereum (ETH)

• If the price of Ethereum remains above $3,400, we could anticipate a break of $3,700. The next resistance to consider would be $3,900 or even $4,100. If the bullish movement continues, we could mark a new high at $4,400. If Ethereum's momentum picks up, it would not be impossible for Ethereum to reach its all-time high around $4,800. At this point, that would represent an increase of more than 31%.

• If the price of Ethereum fails to stay above $3,400, we could envisage a return to around $3,100. The next support to consider, if the bearish movement continues, would be in a price range around $3,050. At this point, this would represent a drop close to -17%.

Conclusion

Following a period of decline, Ethereum has seen a remarkable recovery, supported by optimistic expectations related to the approval of Ethereum spot ETFs. This positive momentum, illustrated by the reaching of a key resistance level and renewed confidence among investors, suggests an encouraging trend for the cryptocurrency. However, we will have to wait for official publications to confirm the acceptance of these ETFs and, therefore, the continuation of the craze for cryptocurrency. Thus, it will be crucial to carefully observe the price reaction at different key levels to confirm or refute the current hypotheses. It is also important to remain vigilant against potential “fake outs” and “market squeezes” in each scenario. Finally, let us remember that these analyzes are based solely on technical criteria and that the price of cryptocurrencies can also evolve quickly depending on other more fundamental factors.