Ethereum Experiences Best Performance Since December 2020

Ether Surges Past Key Realized Price Metric

One of the most significant technical signals this week has been Ether crossing above its realized price for accumulating addresses at $1,900. This level represents the average cost basis of many holders, and the breakout suggests that most ETH investors are now back in profit territory.

According to on-chain data from CryptoQuant, Binance has emerged as the most active exchange during this rally, providing the bulk of the recent buying pressure. The rise in Binance activity and the accompanying increase in outflows are indicative of stronger trader confidence, abundant liquidity, and a generally bullish sentiment across the Ethereum market.

Ethereum Forms Bullish Pattern As Traders Eye “Moonshot” Rally

Veteran trader Peter Brandt recently shared a technical analysis on X (formerly Twitter), pointing to a critical chart formation: a rising wedge pattern. Typically viewed as a bearish structure, this wedge could act as a setup for a bullish breakout if ETH can push through the upper resistance line.

Brandt’s revised outlook suggests that if Ethereum breaks above this wedge, it could test the descending resistance trendline, setting the stage for a price move toward the $3,800 to $4,800 range.

Perhaps most interestingly however, this represents a notable change in sentiment from earlier in 2024, aligning with the growing optimism around the altcoin’s prospects.

This is also notable because Ethereum has been struggling in terms of price despite receiving positive feedback and support from both the crypto community and on an institutional level.

Open Interest In Ethereum Futures Spikes 42%

Adding fuel to the bullish fire, Ethereum futures have seen an extraordinary 42% rise in open interest (OI). Between May 8th and May 11th, Ethereum’s OI jumped from $21.3 billion to $30.4 billion, approaching its previous all-time high of $32 billion, according to data provided by CoinGlass.

Such a sharp increase in futures activity is often a precursor to elevated price volatility. The rise in open interest indicates strong speculative interest, which may amplify Ethereum’s price movements in the days ahead.

Source: TradingView

Moreover, from a higher-time frame (HTF) perspective, Ethereum has made a strong recovery on the weekly chart. The altcoin is currently testing the 50- and 100-week Exponential Moving Averages (EMAs), a zone that often acts as either strong resistance or support.

Furthermore, based on Fibonacci retracement analysis, ETH has retraced into the 0.5 to 0.618 zone, corresponding with the current $2,500 price level. Historically, this zone often marks the first leg of a bullish reversal, although a short-term pullback is still possible before any continued upside.

Short-Term Sentiment Shifts to Cautious Optimism

Despite the rally, there are numerous clear signs that the short-term sentiment for ETH may be cooling. Liquidation heatmaps show strong buy-side liquidity in the $2,200 to $2,400 range, suggesting that the market could consolidate or retrace after recent gains.

In addition, the taker buy-sell ratio, which is an indicator that compares the volume of aggressive buys to aggressive sells in perpetual futures markets, also dipped below 1 on May 10th, indicating short-term bearishness.

Source: CryptoQuant

This decline suggests that more traders are entering short positions or closing longs, a trend that could lead to temporary consolidation below the $2,500 level.

Ethereum Bulls Remain In Control, But Caution Warranted

In any case, Ethereum is showing remarkable strength, with its best weekly performance in years, surging volumes, and technical setups pointing toward further gains.

However, the cooling of short-term indicators and the proximity to major resistance levels mean that traders should remain cautious and watch for potential consolidation or minor pullbacks.

Still, with institutional interest rising and Ethereum fundamentals strengthening, the path to $3,800 to $4,800 is looking increasingly achievable, if current momentum holds.