Ethereum has been consolidating in a tight price range for several months, trading between $3,200 and $3,500. Despite the broader market’s recent upward movement, ETH is still struggling break out of this range.
This stagnation comes after a prolonged decline from its all-time high of $4,800, recorded in late 2021. The cryptocurrency is now down 32% from this peak.
Notably, even the appointment of the new pro-crypto administration and a renewed sense of regulatory clarity have done little to propel Ethereum beyond its current resistance levels.
Amid these market conditions, ShayanBTC, a contributor to Cryptoquant’s QuickTake platform, has marked A critical metric that can signal an impending price move for ETH.
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Elevated leverage ratios in Ethereum and its consequences
According to Shayan in a new analysis uploaded on the Cryptoquant QuickTake platform, the estimated leverage ratio for Ethereum – a measure of the average leverage used by futures market participants – has climbed steadily so far.
This increase reported by Shayan reflects an increased willingness among traders to take on the risk, even as Ethereum’s price remains firm on consolidation. With leverage at elevated levels, the stage may be set for a significant price swing, although its direction remains uncertain. Shayan noted:
The impending breakout from this range, fueled by the high yield environment, is expected to trigger a significant and impulsive price move.
Shayan elaborated that as more traders take higher leverage, the market becomes more susceptible to sharp price movements. This is because if these leveraged positions are liquidated – either through a short or long squeeze – it can trigger sudden and significant price adjustment.
The ongoing consolidation around $3,200-$3,500 has increased interest in what lies ahead for Ethereum. The Cryptoquant analyst wrote:
Given the prevailing market sentiment, a bullish breakout seems more likely. However, traders should monitor the leverage ratio closely, as any sudden changes can lead to unexpected volatility and liquidations.
ETH market results
At the time of writing, ETH is trading at $3,282, down 0.1% in the last 24 hours. Interesting, despite this slack performance From ETH, the asset’s daily trading volume over the past week has been quite positive.
Last Wednesday, ETH’s trading volume sat below $20 billion, but as of today, Ethereum’s daily trading volume hovers over $24 billion. This is quite a opposite trend Especially compared to ETH’s market performance over the same period.
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According to Javon Marks, a noted crypto analyst at X, Ethereum appears to be on the verge of a significant rally to $12,000 due to a similar performance to the FIB level as it did in a previous bull cycle.
ETH (Ethereum), with a similar performance to the 1,618 FIB level as it did the previous bull cycle, could be set for a near +240% increase from here to the $11,865.6 levels!
A 5-figure could be on the way and underdevelopment now and this could help many altcoins to big runs 👀. pic.twitter.com/ejt1fu986b
– Javon⚡marks (@javontm1) December 29, 2024
Featured Image created with Dall-E, charts from TradingView