Ethereum is Overbought. Is the Uptrend Ending?

Ethereum is on one of its biggest uptrends. It picked up momentum on Tuesday, peaking at $2,628. It ended the previous week with gains exceeding 15%.

Nonetheless, the asset registered a milestone on Thursday. It surged to a high of $3,000 for the first time since January. The largest altcoin continued upwards, hitting a high of $3,040. 

The uptrend follows several bullish fundamentals that saw the crypto market break its sideways trend. News of the industry seeing a structured regulation in the US and the White House’s recent support for it saw investors shed off their uncertainties.

The Federal Reserve chairperson is considering relinquishing his role. Jerome Powell’s failure to cut interest rates saw him gradually lose the favor of most crypto investors. Hence, the announcement that he might step down sent traders more positive.

It is worth noting that the ongoing price increases are unsurprising. A previous report stated that the one-week chart indicated a surge above $2,900, citing the moving average convergence divergence as another reason for the conclusion.

Previous data spotted a massive accumulation around $2,500. Over 3.45 million ETH had a cost basis around the mark. The level served as a launchpad for the ongoing surge. Meanwhile, investors continued buying ETFs. The investment funds recorded their largest weekly net inflow since inception, a whopping $657 million. 

However, there are growing concerns following the massive increases in the asset last week. 

Ethereum Is Due For Corrections

The 1-day chart reveals several sell signals. RSI is at 73, indicating that the largest altcoin is overbought. Traditionally, this means that the asset is seeing peak buying pressure and is due for a correction. Massive selloffs follow this phenomenon. The trend may repeat this time, sending the altcoin plummeting.

Ether trades surged above the bollinger bands a few hours ago. It may signal an impending selloff in the coming days. The fibonacci retracement levels point to notable demand concentration around the 78% mark. The asset will break it, plummeting to the 61% mark at $2,600. 

The predictions may be playing out as Ethereum trades at $3,028 at the time of writing. Its latest value may indicate growing selling pressure. Data from CryptoQuant suggests that this may be the case, as exchange reserves are increasing.

The buy-sell ratio is at 0.94, below 1, indicating that the bears are gradually gaining a foothold. A few other metrics are currently negative. 

Derivatives Market Heats Up

Ethereum is becoming bearish on the spot market. However, the asset is seeing notable volume from this sector. Data from CoinMarketCap reveals that it saw a 100% spike in trading volume over the last 24 hours. 

Nonetheless, derivatives are receiving almost equal attention. CryptoQuant reports reveal that open interest and funding rate are growing. It also shows that short positions account for a large percentage of the liquidations in the last 24 hours.

The figure may change as the data from Coinglass points to a massive spike in short positions over the last 4 hours. They made up over 53% of the open positions during this period. The effect of this change is visible in liquidated capital over the last 1 hour. 

Traders lost $10.7 million trading ETH. However, long positions accounted for almost 95% of the total liquidations. If the trends continue, Ethereum will experience further downtrends.

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