Whales Swept Up Supply Thrown by Retail Investors, Will Ethereum Launch an Explosive Rally?

▲ Ethereum (ETH)/ChatGPT Generated Image ©

As giant whales swiftly sweep up the supply dumped by individual investors in a panic selling spree, Ethereum (ETH), the leading altcoin, is creating a tense atmosphere like the calm before a massive explosion. If Ethereum, which has broken out of a tedious six-month-long downtrend channel, surpasses the $2,400 resistance level, an analysis suggests that a massive liquidity burst of $1.94 billion could trigger an unprecedented bull market, drawing significant market attention.

According to TradingNews, an investment specialized media outlet, on April 29 (local time), Ethereum rose by 1.65% during the day, trading around the $2,340 level. This is a significant move as it broke through the upper resistance line of the downtrend channel that has continued since late last year, simultaneously recovering the 100-day simple moving average near $2,200, establishing the strongest upward foundation in the last six months.

The most noticeable phenomenon in the current market is the stark divergence in actions between individual investors and large institutions. Over the past week, individual investors, gripped by fear, dumped 756,000 Ethereum into the market, but whales absorbed this supply and began accumulating. In particular, Bitmain, a company associated with Fundstrat, additionally acquired 45,000 Ethereum, worth approximately $103.5 million, over the past week. Furthermore, Ethereum holdings on exchanges have hit their lowest level since 2016, signaling a severe supply shortage.

Indicators in the derivatives market also point to a strong upward breakout. The persistent negative funding rates for Ethereum perpetual futures and the decrease in Open Interest suggest an excessive concentration of short positions. If Ethereum breaks through the $2,400 resistance level, which it has repeatedly failed to overcome, with strong trading volume, a $1.94 billion short squeeze (buying pressure generated to close or cover short positions) could be triggered, potentially propelling the price to $2,800 in one go. The Moving Average Convergence Divergence (MACD) on the daily chart has also turned into a strong buy signal.

Adding to this, Ethereum's historical May return statistics are fueling bullish sentiment. Since its launch in 2015, Ethereum has consistently recorded an overwhelming average monthly return of 34% in May. If this historical average is replicated in May this year, it could jump to the $3,100 level instantly. However, the media pointed out that the outflow of $50 million weekly from Ethereum spot ETFs and its strong dependence on the price movements of the leading cryptocurrency, Bitcoin (BTC), remain downside risks that need to be overcome.

Experts diagnose that Ethereum is currently entering a structural recovery phase, not just a simple momentum chase. A strict strategy is required: maintain a bullish bias above the $2,200 support level, respond with active buying if it breaks $2,400, but only sell if $2,000 breaks. The next 96 hours, which will determine whether Ethereum breaks the $2,400 level with $1.9 billion in liquidity at stake, are expected to be the biggest turning point for Ethereum's medium-to-long-term fate.

*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.*