Ether, Ethereum’s native currency rose to $1,161, but was corrected after movement.
Ether rises to $1,161 for the first time in three years: what comes next?
The price of Ether (ETH), the native cryptomeda of blockchain Ethereum, reached US$1,161 for the first time since January 2018. Immediately after reaching a new three-year record, the ETH corrected below the US$900 level.
Ether recovered from Bitcoin’s boost. Historically, after Bitcoin Pro a strong BTC rise, the altcoins have experienced a rapid upward trend. Traders generally call this „altseason“ because many altcoins tend to rise together.
Why did Ether correct and what’s next?
Ether went up after Bitcoin’s recovery, but the network data also showed that there was a liquidity crisis on the seller’s side.
Over 2020, ETH reserves in exchanges fell to historic lows. This means that fewer ETHs could be sold at exchanges. Ki Young Ju, CEO of CryptoQuant, explained:
„It seems that the selling liquidity crisis has started to hit $ETH, as has the $BTC market. For the $BTC, all exchange reserves have decreased by 31% compared to February 2020. For $ ETH, all exchange reserves decreased 20% compared to May 2020. ”
However, despite a strong recovery to levels not seen since January 2018, Ether retreated quickly. There are two main reasons behind his correction: high financing and heavy sales orders at a key resistance level.
According to Glassnode data, Ethereum’s futures financing rate averages 0.2% at major exchanges.
Normally the financing rate is around 0.01% when the futures market is not overheated. Glassnode analysts said:
„Ethereum’s funding rates are at a record high, breaking an average of 0.2% at major exchanges. #BitMEX is leading the group with a funding rate above 0.4%. ”
Ethereum futures financing rate. Source: Glassnode
When the market is strongly influenced by buyers or holders of purchase contracts, the probability of a long squeeze increases.
The term „long squeeze“ refers to a scenario during which holders of purchase contracts are forced to liquidate their positions when the Bitcoin price falls. This causes selling pressure on BTC to intensify in a short period of time.
What future do traders envision for Ethereum?
A trader known by the pseudonym „Mayne“ said that Ethereum rejected the weekly level, which is where the ETH price was when the weekly candle opened on Monday. The trader said:
„Rejecting the weekly supply EQ for now. The forecasted funding is going away, it looks like the monkeys are pressing the long green leverage button. I’m out of long term cravings and commitment for the time being. ”
Market and on-chain analysis data generally suggests that late buyers are being driven out by aggressive sellers. As soon as the ETH surpassed $1,100, the spot market saw an increase in sales orders.
Alex Wice, one of the top performers on the FTX leaderboard, shared a sold position on Ethereum and Bitcoin on social networks.
The trader also expressed concern over Ethereum’s high funding rate and suggested that they would have to restart.