Ethereum has been consolidating in a narrow price range for several months, trading between $3,200 and $3,500. Despite the recent uptrend in the broader market, ETH is still struggling to break out of this range.
This stagnation follows a prolonged decline from the record high of $4,800 recorded in overdue 2021. The cryptocurrency is currently down approximately 32% from that peak.
It is worth noting that even the installation of a recent pro-crypto administration and a renewed sense of regulatory transparency have done little to push Ethereum beyond its current resistance levels.
In these market conditions, ShayanBTC, co-founder of CryptoQuant’s QuickTake platform, highlighted a critical indicator that can signal an upcoming ETH price move.
Elevated Ethereum Leverage Ratios and Its Implications
According to Shayan in a recent analysis posted to the CryptoQuant QuickTake platform, Ethereum’s estimated leverage ratio – a measure of the average leverage used by futures market participants – has been steadily increasing so far.
This escalate, as Shayan reported, reflects investors’ increased willingness to take risks even as Ethereum’s price continues to consolidate. With increased leverage, significant price movement may occur, although its direction remains uncertain. Shayan noted:
The impending breakout from this range, driven by a highly leveraged environment, is expected to trigger significant and impulsive price action.
Shayan explained that as more traders apply more leverage, the market becomes more susceptible to wild price changes. This is because if these leveraged positions are liquidated – either through a miniature or long tightening – it could result in a sudden and significant price correction.
The ongoing consolidation around $3,200-$3,500 has increased interest in what lies ahead for Ethereum. CryptoQuant analyst wrote:
Given the prevailing market sentiment, a bullish breakout seems more likely. However, investors should monitor the leverage ratio closely as any sudden change could lead to unexpected volatility and liquidation.
ETH market performance
At the time of writing, ETH is trading at $3,282, down 0.1% over the last 24 hours. Interestingly, despite ETH’s penniless performance, the asset’s daily trading volume was quite positive last week.
Last Wednesday, ETH trading volume dropped below $20 billion, but as of today, Ethereum’s daily trading volume exceeds $24 billion. This is a completely opposite trend, especially when compared to ETH market performance during the same period.
According to Javon Marks, a renowned cryptocurrency analyst at
ETH (Ethereum), with a Fib-like performance at 1.618 as in the previous bull cycle, could surge almost +240% from here to $11,865.6!
5-digit ETH may be on the way and in development, which could lend a hand many altcoins surge substantial
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— JAVON
SIGNS (@JavonTM1) December 29, 2024
Featured image created with DALL-E, chart from TradingView
