Ethereum’s evolving market dynamics indicate a potential bullish breakout, driven by reduced supply on exchanges and growing investor sentiment.
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Ethereum’s Exchange Supply Ratio drop signals reduced sell-side pressure, suggesting potential price growth.
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Short liquidations outpaced long liquidations, increasing the chances of a short squeeze and price surge.
Ethereum’s market sentiment indicates a possible breakout to $2,000 as supply constraints tighten and investor interest surges.
Network activity heats up: Is retail sentiment bullish?
Ethereum’s network activity shows encouraging trends. The number of New Addresses increased by 32.24% over the past seven days, signaling growing investor interest.
Additionally, Active Addresses have risen by 6.96%, confirming strong participation from current holders. The Zero Balance Addresses have climbed by 120.50%, showing that retail sentiment remains high.
Although many investors have yet to take significant positions, Ethereum’s adoption continues to expand. The increasing number of active users supports a continued upward trajectory for ETH.
Source: IntoTheBlock
Meanwhile, analysis of the recent short liquidations showed that $2.15 million in total liquidations occurred, with $643.58K coming from Binance alone.
Naturally, if ETH breaks above $1,900, short liquidations could accelerate, fueling a potential short squeeze.
Such a move would add momentum to any rally, especially if liquidity hunters force market participants to cover their shorts.
Outflows continued as exchange supply thinned
Ethereum saw significant Outflows from Exchanges, with -4,211 ETH flowing out as of press time.
This trend points to increased confidence among holders, who appear content keeping ETH off trading platforms.
With fewer tokens for sale, the setup favored further bullish continuation.
Source: Santiment
Meanwhile, Ethereum’s Funding Rate remains positive at 0.00543%, signaling a bullish market sentiment.
The number of long positions exceeds short positions, indicating that investors are confident in Ethereum’s price action.
The positive Funding Rate reflects the market’s optimism. This sentiment aligns with Ethereum’s potential for further price increases, suggesting that the asset may continue to rise.
Is ETH ready for a bullish breakout?
Ethereum is forming a head and shoulders pattern, with key support around $1,758 and resistance at $1,836–$1,850.
If Ethereum breaks through this resistance, the price could target $2,000, marking an 8.9% potential gain. The volume trend is increasing, supporting the likelihood of a breakout.
If Ethereum surpasses this critical resistance, it could trigger a sharp rally towards $2,000. The head and shoulders pattern suggests a bullish continuation if the neckline is breached.
Source: TradingView
Conclusion
Conclusively, ETH’s Exchange Supply Ratio decline, strong network activity, and liquidity pool formations point to a bullish outlook.
The head and shoulders pattern and increasing short liquidations support the likelihood of a breakout toward $2,000.
With a positive Funding Rate and reduced sell-side pressure, ETH is positioned for continued upward momentum, potentially reaching higher targets in the near future.
