Ethereum price has rebounded in the past few days as investors continued buying the dip in anticipation of a spot ETF approval later this year. ETH is nearing the psychologically important resistance point at $2,400, which was about 10% above its lowest point this month.
Short-sellers liquidated
Ethereum’s rebound has led to substantial liquidations of short-sellers. Data by CoinGlass shows that total liquidations of shorts jumped to over $15.9 million on Tuesday, its highest figure since January 12th this year. Most of these liquidations happened in Binance and OKX, two of the biggest crypto exchanges in the industry. The figure was likely higher than that when you include Coinbase, the American exchange that is not included in the CoinGlass calculation.
The $15.93 million in shorts liquidation figure was much higher than the $1.5 million of bulls that were liquidated. In most cases, a major increase in shorts liquidations is seen as a positive thing for a cryptocurrency. This happens because, in these cases, some of the traders who are liquidated tend to move in the opposite direction and buy the coin.
The biggest liquidation of Ethereum short-sellers happened on January 10th of this year when the SEC approved 11 spot Bitcoin ETFs. This approval led to a major jump of Ethereum as it moved from $2,347 to a high of $2,640.
Crypto fear and greed retreats
This week’s Ethereum price action happened at a time when the crypto fear and greed index has retreated substantially. Data compiled by CoinMarketCap shows that the index has retreated to the neutral point of 56, which is much lower than the year-to-date high of over 80.
This is an important gauge that provides more information about the sentiment among investors in the crypto market. It looks at things like social media mentions, volatility, dominance, and trends.
The sharp decline in the index has also coincided with the relatively low volume of crypto traded in exchanges. Data shows that the volume of cryptocurrencies stood at over $44 billion on Tuesday. While this is a big number, it is still significantly lower than the year-to-date high of $87.7 billion, which happened after the SEC approved Bitcoin ETFs.
Historically, cryptocurrency volume usually goes through phases and also corresponds to the overall prices. In this case, the volume has dropped because Bitcoin is still much lower than the YTD high of $49,000.
Catalysts for Ethereum
There are two main potential catalysts for Ethereum price in the coming months, including:
Spot Ethereum ETF approval
A likely catalyst for Ethereum price is the potential approval of a spot Ethereum ETF approval by the Securities and Exchange Commission (SEC). Several companies like Blackrock, Grayscale, and Ark Invest have filed for this fund. They hope that the SEC will use its precedence on Bitcoin and approve it. Besides, Ethereum is the second-biggest and most liquid crypto in the world.
However, the risk is that Ethereum and BTC are significantly different. Bitcoin is a proof-of-work (PoW) coin while Ethereum is a proof-of-stake coin with staking features. The SEC sees these staking features as problematic because ETH is not regulated.
Bitcoin halving ahead
The other potential catalyst is the upcoming Bitcoin halving, which is now 60 days away. In most periods, cryptocurrencies tend to rally ahead of this halving event. This situation is also notable because it will coincide with the hopes of Federal Reserve interest rate cuts. Therefore, there is a likelihood that these factors will push ETH higher.
Technicals are supportive
Further, ETH has some supportive technicals. For one, the coin has remained above the 50-day and 25-day moving averages and is attempting to cross the crucial resistance at $2,445, its highest swing on December 28th. A move above that price will open the possibility of ETH soaring and retesting the year-to-date high of $2,700.
