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Ethereum Price Hits $3,000 But Quickly Falls 2.7% — Has It Reached Its Top?

Last Updated February 20, 2024 4:02 PM
Nikola Lazic
Last Updated February 20, 2024 4:02 PM
By Nikola Lazic
Verified by Peter Henn

Key Takeaways

  • Ethereum reached $3,000, but there are shows signs of a potential correction.
  • The ETH derivatives market, not fundamentals, drove the price rise.
  • Ethereum may reach $3,200 in the short-term.

On February 20, the Ethereum price reached $3,000, a value last seen in April 2022. However, it fell back by nearly 3% to $2,920 almost immediately. This was the continuation of an uptrend that started on February 17. Now, though,  there are some signs of weakness. So, is this uptrend over?

Ethereum Price Analysis 

On December 25, Ethereum‘s price soared to nearly $2,700, marking its highest level since May 2022, after recovering from a dip to $1,000 in June 2022. This rebound was part of an rising channel pattern, suggesting the potential start of a bullish trend within the emerging bull market. Now, we are anticipating a correction. 

Daily chart.
ETH in an uptrend from January 25.

However, Ethereum’s price has been climbing since January 25, suggesting the possibility of achieving new highs if it moved above $2,500, which it did. Today, as a higher high was reached, it invalidated the possibility of a starting correction phase, although the rise above $2,500 hinted that. 

With today’s high regaining values last seen in April 2022, its first bull stage still hasn’t ended. This is why we could see further upside movement to its next significant horizontal resistance at $3,200. 

But after the current rise ends, we would still expect the first bull market correction. If the price reaches $3,200, the target for its correctional downtrend would be between $2,100 and $1,800, as suggested by the Fibonacci retracement levels. 

What’s Driving The Ethereum Price Rise?

Looking at Ethereum’s fundamentals, there aren’t any negative signs, but there aren’t many positive ones as well. And with the price going up, this divergence could be interpreted negatively. 

On-chain data.
Number of transactions not out of the ordinary.

The larger transactions number has been stagnant and has been around six transactions per second for quite some time. With the price rising, it raises the question of who is pushing it higher. The transaction size also doesn’t show an increase, meaning that from this data, we can conclude whales are not stepping in. 

On-chain data
No large transactions in sight.

Other on-chain data, the active addresses, don’t show unusually high activity. This suggests that it is purely the derivatives market driving the Ethereum  price rise. 

 

Derivatives market
Open Interest is high.

Open Interest , which shows the number of outstanding futures contracts, positively correlates with price rises. This means that leverage future traders have been opening positions higher, causing the demand for Ethereum. They are most likely going long on the coin, which, in turn, has caused caused short liquidations. 

Conclusion 

Ethereum’s performance has often been called slim compared to the general market in 2023. But Ethereum’s direction was consistently upward from June 2022, unlike many cryptos that rose and fell. 

There aren’t many fundamental factors driving the current rise, which makes its sustainability questionable. With the derivatives market driving the price, however, we can expect it to reach at least $3,200 in the short term. 

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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