Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, is poised for a massive upside rally as it has formed bullish price action on the daily timeframe. Despite the recent decline in the cryptocurrency market over the past few days, the price action suggests that sentiment is ready to shift from a downtrend to an uptrend.
According to expert technical analysis, Ether has broken out of a bullish falling wedge pattern that it has been forming since November 2024. Following the breakout, sentiment appears to have completely shifted.
Based on historical price momentum, if ETH successfully closes a daily candle above the pattern, i.e., the $3,400 level, it is possible to soar by 20% to reach the $4,100 level in the future. Currently, Ether is facing modest resistance at $3,400, which could play an important role in its future gains.
On the positive side, the Relative Strength Index (RSI) is at 55, indicating that ETH has enough strength to sustain upside momentum.
However, despite the breakout and recent gains amidst market uncertainty, long-term holders and investors have reportedly been dumping their assets, according to on-chain analytics firm CoinGlass. Data from spot inflows/outflows reveals that exchanges have seen a significant inflow of $103 million worth of Ethereum.
In the cryptocurrency industry, inflow refers to the flow of assets from wallets to exchanges, indicating a potential sell-off, which can cause selling pressure and further price decline.
However, not only have long-term holders shown strength, but traders have also been betting strongly on the long side, indicating a bullish outlook.
At press time, the major liquidation areas are $3,305 on the lower side, where bulls are over-leveraged and hold $360 million worth of long positions. Conversely, $3,370 is the level where short sellers seem to be over-leveraged, holding $190 million worth of short positions.
These on-chain metrics hint that bulls are strongly dominating the asset and could support Ether in breaching the resistance level of $3,400.
ETH is currently trading near $3,350 and has experienced a price surge of over 1.50% in the past 24 hours. However, during the same period, its trading volume jumped by 10%, indicating heightened participation from traders and investors, potentially driven by the recent breakout.
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