So far, Ethereum has had a rough year. The coin has been losing ground over the last week, continuing the negative trend since December. Still, the latest indicators show strong signs of a potential reversal, as ETH approaches a key crossroad.
On Wednesday, February 26, ETH traded at $2,426, quite below its recent high of $4,000 in December. Like the rest of the crypto market, Ethereum has been trending down slowly.
Still, over the past week, the token has repeatedly defended the $2,400 price point, which indicates strong support at that level. At the same time, signs of a reversal could be coming.
For one, ETH is approaching a bullish segment of its four-year cycle. Both in 2017 and 2021, the coin peaked, reaching its all-time high (ATH), which took four years to surpass. At the same time, the Stochastic RSI indicator mirrored these trends and is currently oversold.
If these trends hold, Ethereum is set for a sharp move up, surpassing its November 2021 ATH of $4,891. The token could go even higher, thanks to the potential for a short squeeze. Notably, if Ethereum reaches $3,000, over $2 billion in short positions would face liquidations, pushing the token even higher.
Ethereum Continues to Attract Major Investors
Ethereum’s growing acceptance among major financial institutions is the fundamental case for a sharp rise. So far, Bitcoin and Ethereum are the only cryptos with significant institutional involvement. Notably, the Grayscale Ethereum Trust ETF manages $3.217 billion in Ethereum for institutions.
One of these investors is Michigan’s state pension fund, which invested over $10 million in ETH. Still, Ethereum’s institutional backers also introduce new risks, such as exposure to global market volatility. For this reason, reactions to potential trade wars and interest rate policy can lead to rapid sell-offs.
If ETH falls significantly, further liquidations can follow. Currently, the breakeven point for large ETH holders is at $2,199, which is a key support for the token. If the price falls below that level, this could trigger selling, causing Ethereum to fall to its next support at $1,800.
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