Ethereum: Bearish exhaustion hits the market – Is $4.5k next for ETH?

Key Takeaways

What’s driving Ethereum’s rebound above $4K?

Ethereum surged 4.82% as whales increased buying, Exchange Netflow turned negative (-13.3K ETH), and seller exhaustion signaled a bullish divergence.

Can ETH sustain this uptrend?

If ETH breaks above the 50-day MA at $4,181, it could climb toward $4.5K; however, macro headwinds could trigger a pullback to $3,819.

Since hitting a low of $3.6k four days ago, Ethereum [ETH] has traded within an ascending channel, holding firmly above its long-term EMA.

As of this writing, Ethereum was trading at $4061, marking a 4.82% increase over the past 24 hours. At the same time, trading volume rose by 71% to $39.2 billion, reflecting increased on-chain activity and capital flow. 

Is this the start of a sustained price recovery?

Ethereum’s selling pressure eases

According to CryptoQuant, Ethereum formed two equal lows around $3.7k, while the altcoin’s Cumulative Net Taker Volume made a higher low.

As a result, ETH saw a bullish divergence, indicating easing selling pressure with sellers running out of steam after a prolonged period of market dominance. 

For context, during the crash on the 11th of October, Net Taker Volume dropped to -$2.82 billion. Since then, it has recovered to -$1.9 billion, showing early signs of seller exhaustion. 

Buyers step up, led by whales

With sellers getting exhausted, buyers have jumped into the market to fill this gap. These buyers are mostly whales, as evidenced by Spot Average Order Size data from CryptoQuant.

This metric shows big whale orders, signaling whale participation.

Interestingly, upon examining exchange activities, AMBCrypto determined these whales are mostly buying ETH. According to CryptoQuant data, Exchange Netflow dropped significantly, hitting a negative value. 

At press time, Netflow was -13.3k, a significant drop from 26.8k ETH the previous day. Such a considerable shift indicates rising buyer dominance in the market, with sellers facing displacement. 

Futures eyes a recovery

As Ethereum rebounded, investors rushed into Futures to take strategic positions. In fact, Open Interest rose from $19.4 billion to $21.6 billion at press time, marking a $2.2 billion increase. 

Often, such a massive spike in OI signals increased participation in Futures, with investors taking either long or short positions.

However, this spike in participation had an unexpected consequence — Binance investors faced massive liquidations. 

Per CryptoQuant, Binance saw over $500 million worth of long liquidations, resulting in the most significant long squeeze in weeks. 

As per the analyst, these conditions are a blessing for the ETH price recovery. This is because, historically, after long liquidations, ETH has tended to recover gradually. 

The gradual recovery occurs, especially if liquidation sees investors using high leverage flushed out. 

Can ETH sustain the uptrend?

Ethereum signaled recovery at press time as buyers stepped up, while sellers looked exhausted after a prolonged period of dominance.

As a result, the altcoin’s Sequential Pattern Strength jumped from -12 to -1.1, signaling bearish exhaustion and emerging buyer strength.

These market conditions have historically emerged during early recovery phases and preceded a significant price rebound.

If these conditions hold, ETH will first reclaim its Short-term MA (50MA) at $4181. A clean close above here will strengthen the altcoin to reclaim $4.5k.

However, if market sentiment turns bearish again, influenced by macroeconomic factors as it was a week ago, ETH will once again retrace towards $3819.