- Ethereum showed signs of accumulation from investors in the past three weeks.
- The momentum when disbelief turns into FOMO could usher in even more gains for ETH.
Ethereum [ETH] attracted flak from Peter Brandt, who called it a “junk coin” with “outrageous” gas fees. Despite the harsh statements, a portion of the market had bullish conviction in the token.
On the 8th of April, it noted a 6.5% rally at the time of writing. These gains came even though a bearish chart pattern forecasted a drop to $2800. Are the majority of the participants in disbelief of the current rally, or is this a temporary retracement before the next leg downward?
The U.S. traders are in disbelief
Source: CryptoQuant
The Coinbase Premium Index represents the percentage difference in prices between Binance and Coinbase. The former is not available to U.S. residents, which is why Coinbase is a good index for U.S. participant enthusiasm.
From the 2nd of April to the 7th, the Coinbase premium fell toward zero. Yet, at that time, ETH was in the process of unmaking recent losses. In contrast, when there was a strong rally toward the end of February, the Coinbase premium trended swiftly higher.
ETH to $4k once more?
Source: CryptoQuant
After the drop to $3056 on 19th March, the exchange reserves of Ethereum began to trend lower. This was a sign that users were offloading their tokens out of centralized exchanges. It implied accumulation and a reduction in the selling pressure.
This downtrend has not stopped yet, although there was a minor uptick in the exchange reserve on 7th April. This was when the $3.4k short-term resistance was reclaimed, giving some investors a reason to realize profits.
Overall, a continued downtrend in the reserves metric would be excellent news for long-term bulls.
Source: CryptoQuant
A look at the short liquidations showed that the past two days saw a vast amount of Ethereum short liquidations. CryptoQuant data showed it was worth just over 17k ETH. These liquidations, once triggered, open market buy orders which would drive prices higher.
Is your portfolio green? Check the Ethereum Profit Calculator
Combined with the disbelief we saw with the Coinbase Premium Index, it appeared likely that Ethereum would blow the bears out of the water if the rally continued.
Their forced capitulation will be rocket fuel for further gains. We could see a short squeeze and $4k ETH once more this week, and the disbelief could rapidly turn into FOMO.
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