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After enduring a significant downturn at the beginning of the past week, Ethereum (ETH), the second-largest cryptocurrency, has staged a modest recovery, reclaiming the crucial $2,600 level and setting its sights on the $3,000 milestone once again.
The August 5 crash, which saw Ethereum’s price plummet to $2,112, marked the year’s largest market slump. However, the digital asset has since bounced back, 8% in the last seven days, hinting at the possibility of a more sustained bullish trend.
Massive Ethereum Liquidations Trigger Bullish Signals
According to a recent report by market analytics firm CryptoQuant on the ETH’s price action, the chart below highlights a substantial liquidation of long perpetual positions on the futures market experienced during last week’s crash.
The firm notes that in sustained bull markets, such a significant liquidation event is often followed by a major price rally as the futures market stabilizes and spot buying pressure takes over.
ETH long positions liquidated on all exchanges. Source: CryptoQuant
“The recent cascade has triggered massive long liquidations, reaching levels not seen since November 2022,” the firm noted. “This substantial liquidation likely indicates a cooling of the futures market, where many leveraged positions have been flushed out. Such a development can set the stage for renewed interest in the futures market.”
With the futures market potentially resetting, CryptoQuant believes that if demand returns, Ethereum could be poised for another impulsive bullish surge in the longer term that could send prices above previous all-time high levels.
ETH’s Price Path To $3,000
Crypto analyst Caleb Franzen echoed a similar prediction for ETH’s price in a social media post on the X platform (formerly Twitter), suggesting that if Ethereum can take out the $2,725 level, it could signal a strong move higher.
Franzen’s analysis of the 4-hour candles and market structure indicates a series of higher lows and a bullish reading on the supertrend indicators, further fueling the optimism surrounding Ethereum’s future performance.
However, with ETH currently trading at $2,645, the first resistance on the ETH/USDT weekly chart, located at the $2,700 level, has proven to be the first hurdle for the second-largest cryptocurrency to overcome in recent days.
In a scenario where the current rally extends into the coming weeks and the ETH price tackles the level highlighted by Franzen, the $2,900 and $2,990 resistance walls would be the last obstacles to reclaim the $3,000 level.
Conversely, the token will need to secure and consolidate above the $2,550 level to prevent further declines toward the next support on the daily chart, currently located at the $2,345 level following its 25% correction.
Featured image from DALL-E, chart from TradingView.com
