Ethereum Price Rally: Bullish Gains vs Bearish Risks
Ethereum’s Explosive Q2 and Q3 Gains
Ethereum closed higher in Q2, closing the quarter with a 36.5% gain.
The uptrend picked up steam in Q3, with ETHUSD already up over 70% to date on Binance.
Notably, the token renewed its ATHs and briefly tested USD 4,957.5.
Institutional Inflows and ETF Momentum
The key support driver stems from inflows into cryptocurrency ETFs that reportedly pulled in over USD 90 bn – a record figure – in the first and second months of Q3.
Furthermore, institutional investors funneled money in by snapping up the asset for their balance sheets.
Experts also highlight how network technical upgrades have enhanced the token’s appeal.
Bearish Signals and Technical Resistance
However, the recent bull run lays the groundwork for expecting a swift and drawn-out correction in the token.
Based on CFTC positioning data, hedge funds keep piling into short positions on ETH, with their total volume already at record levels.
Key Support and Resistance Levels Ahead
Meanwhile, signs of a potential downward reversal have appeared. Specifically, the weekly chart reveals the following:
• The price action hit the upper bound of the current regression channel, which qualifies as a dynamic resistance level
• ETH briefly topped but failed to break through the November 2021 peak
• ETHUSD reached USD 4,535, aligning with the 161.8% wave extension from the initial price rally seen from mid-April to mid-June. Drawing on the Elliott wave theory, this might wrap up the third impulse wave, opening the door to a downward correction
• ETH has strayed far from its long-time MA, sending a secondary, albeit crucial, signal for a reversal
In the case of a confirmed correction, the first local target for ETH lies in the broad range between USD 3,950 and USD 4,100, while the next support level is at USD 3,590-3,600.
Going down further, the token would find strong support in the USD 3,130-3,170 span.
Bullish Scenario: Can ETH Reach $6,000?
Under an alternative scenario, the bulls could attempt to push the ETH price toward USD 5,000.
Provided they can breach that resistance line and secure a foothold at higher levels, the next upside target would be near USD 6,000.
