If $2,400 is breached, a $1.9 billion short squeeze will erupt! Ethereum on the verge of explosion!

▲ Ethereum (ETH) ©

Ethereum (ETH), the leading altcoin, is facing a severe macroeconomic headwind, having fallen to the $2,200 level, its price from five years ago, and is stuck in a painful standstill. It now stands at a critical turning point, facing either a collapse of the $2,000 support line or a recapture of the $2,400 mark.

According to TradingNews, an investment media outlet, on April 28 (local time), Ethereum traded at $2,278.50 on Tuesday, down 2.8% from $2,369.84 the previous day. This marks a return to its April 2021 level, and considering inflation, it represents a real loss of 20% to 25%. Despite significant network upgrades and explosive on-chain growth during this period, investors' perceived returns are close to 'zero,' leading to extreme disappointment.

This decline in Ethereum is not due to individual negative factors but rather a series of macroeconomic shocks. Tensions in the Strait of Hormuz in the Middle East caused oil prices to surge, fueling inflation concerns. This, in turn, led to the U.S. Federal Reserve's hawkish outlook on interest rate freezes and a strong dollar trend, encouraging selling pressure on speculative assets like cryptocurrencies. This is evidenced by the fact that even institutional investors have turned their backs, with a net outflow of $50.48 million from U.S. spot Ethereum ETFs in a short period.

To make matters worse, the technical trend is also precarious. Currently, Ethereum is trapped between its 100-day exponential moving average of $2,350 and its 100-day simple moving average of $2,220, showing strong wait-and-see sentiment. Experts warn that if it fails to defend $2,200, it could fall to the psychological support level of $2,000, and in the worst-case scenario, to a multi-year low of $1,750. Conversely, a firm recapture of the $2,400 level is crucial for a dramatic reversal to a bullish market.

The breakthrough of $2,400 is significant because this price point aligns with the 'realized price,' which is the average purchase cost of all holders. If this resistance level is broken, the majority of holders will enter profit territory, potentially igniting buying sentiment. Specifically, it could trigger a massive short squeeze of approximately $1.94 billion accumulated in the derivatives market (buying pressure generated to close or cover short positions), leading to a surge that could push the price to $2,800 in one go.

Ironically, Ethereum's network fundamentals are stronger than ever. 1.3 million transactions per day, a massive staking volume accounting for 32% of the total supply, and $55 billion in DeFi deposits demonstrate Ethereum's structural potential. Investors are holding their breath, watching to see whether the market will rapidly move towards testing $2,000 or breaking through $2,400, depending on the outcome of the upcoming Federal Open Market Committee (FOMC) meeting.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*