Ether’s Rally Faces Make-or-Break Moment as Price Tops Out at $4.8K
Ether (ETH) failed to break through the $4,800 mark, leading to a 3% correction on Tuesday, as a declining divergence on the four-hour chart indicated buyers were losing strength. This drop in price was a result of the declining divergence, which often precedes a local high or a short-term reversal.
Important findings:
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Ethereum did not manage to break through the $4,800 mark, with a declining divergence led to a correction by 3%.
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Spot sales pressure increased, but leveraged traders remained active.
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A recovery of $4,400 could attribute the upward dynamics towards new highs.
When Bitcoin (BTC) rose to a new all-time high on Monday, Ether (ETH) failed to overcome its resistance at $4,800, triggering a sharp correction by 3% on Tuesday. The drop in prices was due to a declining divergence on the four-hour chart. As a rule, this indicates that buyers lose strength, which is often preceded by a local high or a short-term turnaround.
Analysis of the declining ether divergence. Source: CoinTelegraph/Tradingview
ETH again tested the $4,500 mark, with the on-chain and derivative data showing mixed signals. While the cumulative spot volume delta (CVD) has dropped greatly, which indicates net sales pressure on the spot market, the open interest in futures and the CVD of futures are still increased. This indicates that leveraged traders are still active and adapting to volatility, even if spot buyers take profits.
Ether price, aggregated open interest, aggregated futures and Spot-CVD. Source: Coinalyze
Potential Liquidity Boost Near $4,400
Such conditions often attract outside participants who pay more attention to liquidity-driven entries than to impulsive movements. A potential liquidity boost near $4,400, where stop orders are typically frequently used, could serve as a short-term reset. A strong recovery from this zone would destroy the declining constellation and signal a new continuation of the upward trend this week.
However, if ETH does not manage to defend this area, the correction could expand towards $4,100 to $4,200, where both a four-hour and a one-day order block collapse. These overlapping zones often represent areas with high demand in which large orders on the buyer side were previously concentrated, which makes them important levels for possible trend reversals.
Ether four-hour chart. Source: CoinTelegraph/Tradingview
Liquidity Delay for Ether Could Decrease
According to Xwin Research, the US money supply M2, a measure of the economy’s liquidity, has risen to a record $22.2 trillion. While Bitcoin has increased by over 130% in response to this liquidity wave since 2022, Ether only rose by 15%, which indicates a “liquidity delay”.
Nevertheless, several on-chain indicators indicate that Ether could catch up. The exchange reserves have dropped to around 16.1 million ETH, which corresponds to a decline of over 25% since 2022, reflecting a continued decline in sales pressure. The net transfers remain negative, which indicates that ETH is transferring into self-custody and staking, reducing the available supply.
Ether exchange reserves for all exchanges. Source: Cryptoquant
The crypto trader Skew found that the youngest rally marked the “fourth development” of the zone of $4,800. If ETH succeeds in keeping this area, “that would be pretty bullish.” If not, a deeper retreat could form a higher low and possibly initiate the next upward trend.
This article does not contain investment advice or recommendations. Every investment and trade move carries risks, and readers should carry out their own research when deciding.
