Ethereum is showing early signs of recovery after a dramatic sell-off on Friday sent prices tumbling to $3,450. The decline came amid what analysts call the largest liquidation event in the history of the cryptocurrency market, which wiped out billions of leveraged positions on major exchanges. While the bulls briefly lost control during the panic, ETH has since started to stabilize and there has been renewed buying interest near key demand zones.

Onchain analyst Maartunn highlighted that leverage is rising again on Ethereum, signaling that investors are returning to the market after the reset. According to his data, interest in ETH has increased significantly over the last 24 hours, which means that speculative activity is resuming as volatility declines. This renewed leverage could set the stage for another decisive move, either fueling a short-term boost in aid or encouraging further liquidations if momentum weakens.

The coming days will be crucial for Ethereum as bulls will try to reclaim the $4,000 level to confirm a sustained recovery. Market sentiment remains cautious but bullish, with onchain data showing vast holders and institutions continuing to accumulate ETH despite recent turmoil – a potential signal of long-term confidence in the asset’s resilience.

The return of leverage to Ethereum: a risky revival of market activity

According to Maartunn, Ethereum’s open interest has increased by +8.2% in the last 24 hours – a clear sign that leverage is coming back to the market. This rapid rise comes just days after the largest liquidation in cryptocurrency history, in which overleveraged investors were wiped out in a sudden crash. Currently, it seems that many people are trying to “give their money back”, again causing short-term volatility and speculation in the stock markets.

Maartunn notes that while these so-called “revenge pumps” often produce mighty intraday rallies, they rarely maintain long-term momentum. Historically, about 75% of similar leverage-driven recoveries tend to re-emerge, leading to renewed declines once liquidity and funding rates normalize. Only about 25% manage to extend to sustained uptrends, usually supported by fresh spot buying or renewed institutional inflows.

This data highlights the precarious balance Ethereum currently faces. The jump in Open Interest signals a recovery in market share, but also introduces the risk of another wave of forced liquidations if investors overextend their positions. For now, the short-term recovery in ETH is largely driven by derivatives market activity rather than spot demand.

The coming days will be crucial in determining the direction of Ethereum. If the price holds above the $4,000 area on steady volume, it could confirm that the bulls are regaining control. However, a sudden drop in Open Interest or a spike in funding could signal that growth is stalling, setting the stage for another correction.

Ethereum is bouncing, but resistance is ahead

Ethereum is showing a solid rebound after last week’s dramatic sell-off that brought prices down to the $3,450 level. The daily chart shows that ETH quickly rebounded from the 200-day moving average (red line), confirming that this is a major area of ​​demand. The price is currently consolidating near $4,150, trying to gain momentum after a mighty bullish candle on ponderous volume – a potential sign that buyers are regaining control.

However, ETH faces immediate resistance near the $4,250-$4,300 zone, which coincides with the 50-day moving average (blue line). This area has previously acted as mighty support and its recovery would be necessary to confirm a return to the bullish structure. The 100-day moving average (green line) is currently flattening, reflecting cautious market sentiment following the massive liquidation.

If the bulls manage to sustain the price action above $4,000, the next targets will be around $4,500 and ultimately $4,750. Conversely, failure to hold the 200-day MA could open the door to a deeper retest at $3,600 or lower. For now, Ethereum’s recovery remains technically constructive, but needs to clear these resistance levels to confirm that the recent rebound is more than just a short-term reaction to oversold conditions.

Featured image from ChatGPT, chart from TradingView.com