Ethereum (ETH) Encounters Difficulty in Sustaining $3500, Experts Indicate Possible Temporary Setback.

Ethereum ( ETH The price recently hit the highly anticipated level of $3,500, a threshold not seen since 2021 when Bitcoin surged past $64,000—marking more than 27 months of highs and increasing buying activity in the US market. Coinbase exchange and the upcoming Dencun Even with this significant achievement, bullish leverage positions have soared while bearish on-chain indicators have surfaced, suggesting we might be approaching a correction for the cryptocurrency.

In the past 24 hours, the crypto market has witnessed a dramatic uptick in liquidations, with the total exceeding $750 million. Notably, Ethereum experienced around $120 million in liquidations, with sellers offloading approximately $70 million in positions.

The recent uptick in ETH price toward $3,515 came alongside a rise in the cost of bullish leverage positions, which has raised some red flags. As ETH dipped to $3,219 earlier today, many investors speculate that rampant optimism, partly fueled by FOMO, could escalate the risk of mass liquidations.

Moreover, the turbulence in the price near the $3,500 mark led to $102 million in ETH being liquidated, with $66 million of that concerning long positions. This caused current bullish positions to carry more leverage, as the reduction in ETH price to $3,200 diminished their margins. Presently, Ether's funding rate is at 0.067%, translating to about 5.6% monthly, which is considerably higher than the norm observed in recent weeks, hinting at possible unsustainability if the trend continues.

Furthermore, a growing number of short-term holders are choosing to step back from the market as prices hover around the peak zone of $3,300-$3,500, adding downward pressure on the price. The Netflow metric has crossed above its signal line and is currently showing positive numbers, indicating that more ETH is flowing into exchanges than is being withdrawn, resulting in increased exchange reserves. This movement could amplify selling pressure and potentially trigger another drop in ETH's price.

Ethereum’s Price Further Moves 

As ETH grapples with resistance at the $3,500 mark, a price correction is anticipated, prompting more sellers to engage at elevated levels. On the other hand, buyers are showing tenacity at this critical juncture. Currently, ETH is priced at $3,431, reflecting a slight increase of 1.1% from the previous day's close, based on data from CoinMarketCap.

Despite the overall bearish pullback, one silver lining is that the price has managed to stay above the 20-day Exponential Moving Average (EMA) at $3,281, which offers a faint ray of hope. However, there is a looming threat of increased selling pressure if the price fails to breach the $3,500 threshold soon. Should it dip below the 20-day EMA, we might be looking at a decline toward the ascending support level around $3,000.

Ethereum’s recent ascent towards the $3,500 level coincides with rising bullish sentiment, but analysis indicates that a correction might be in the cards, urging investors to proceed with caution.