ethereum has been exhibiting a strong and sustained upward trend, showing its mettle in the volatile cryptocurrency market. At the time of writing, eth price was hovering around $3,743, surpassing its moving averages with considerable bullish momentum.
The cryptocurrency community is now eagerly anticipating the breaking of the important price threshold of $3,500, marking a potential milestone for ethereum's continued rise to the much-coveted price of $4,000.
Notably, the current price has risen well above the 50-day moving average, which sits at approximately $2,700, underscoring the strength of the ongoing uptrend. Additionally, the 100-day moving average at $2,400 serves as another crucial support level. Historically, these key supports have proven instrumental in driving ethereum prices higher upon retesting.
eth Rise: Price Correction in Sight?
ethereum (eth) rose alongside bitcoin (btc) on February 28, approaching its all-time high of $3,500. As bulls celebrate, a technical indicator hints at a possible pause in the rally.
CryptoQuant Funding Rates Metric Revealed, Reflecting Fees Paid on Perpetual Futures Contracts a significant increase for eth the 28th of February. By reaching 0.07%, it marks the highest level since April 2021, surpassing the 0.06% peak seen before eth's previous peak of $4,800 in November 2021. Historically, these sudden increases in exchange rates financing have often preceded price corrections.
Source: CryptoQuant
CryptoQuant's high funding rates not only suggest a possible pause in the rally, but also raise concerns about the sustainability of the current momentum. Typically, these dramatic increases indicate excessive bullish sentiment and overheated markets driven by highly leveraged long positions.
crypto market cap now stands at $2.27 trillion. Chart: TradingView.com
There are two reasons why this scenario is extremely complex. Firstly, in case prices change, bulls expose themselves to significant losses. Second, it raises the possibility of a long squeeze, a rare situation in which strong short-term selling pushes holders of long positions to liquidate, thus accelerating the price decline.
eth up 16% in the weekly chart. Source:ethereum" target="_blank" rel="nofollow"> Coingecko
Imagine a domino effect: leveraged long positions are called when margin calls are called, forcing liquidation, which triggers more selling, pushing prices down further and causing more margin calls. This cascading effect can lead to panic selling and significant losses for overly optimistic investors.
Although there is no certainty that a prolonged contraction will occur, rising funding rates serve as a stark reminder of the inherent risks that are associated with pursuing a very prolonged rebound.
A pre-mine inactive address containing 72 eth?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow”>#eth ($243,771) has just been activated after 8.6 years.https://t.co/K8769uQJ0w
– Whale Alert (@whale_alert) February 28, 2024
Old ethereum whales reappear, sparking cryptocurrency speculation
In another development, a pre-mine ethereum wallet that had been dormant for nearly nine years was reopened, according to data released by cryptocurrency tracker Whale Alert. It has 72 eth valued at $243,771.
This monitoring platform discovered that these 72 eth funds had been moved to another anonymous cryptocurrency wallet. In addition to this wallet, according to recent sources, several dormant ethereum whales woke up in February and were holding pre-mined ethereum worth 100 eth, 429 eth, 3,465 eth (valued at approximately $10.4 million), and 100 eth. They had all been dormant for about nine years.
Featured image from Pixabay, TradingView chart
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