Ethereum (ETH) has gone up by nearly 57% in the past month and it is currently the top-performing cryptocurrency in the top 5 during this time period.
It has been a remarkable recovery for ETH in the last 30 days as the Pectra upgrade catalyzed a significant push toward the $3,000 level.
After dropping to as low as $1,450 in early April, the price nearly doubled at some point this month as market sentiment experienced a radical shift.
This tends to happen when the market gets too one-sided, meaning that most traders are betting on the same outcome.
Short squeezes occur as the price of an asset starts to rise at a point when most traders expected that the opposite would occur. A significant volume of stop orders is typically triggered when this happens and that causes the price to rise as short orders are covered by buying the underlying asset.
In the case of ETH, it was among the most heavily shorted assets as the network struggled to stay competitive amid the rise of other top altcoins and rival smart contract platforms like Solana (SOL) and Sui (SUI).
However, the successful implementation of Pectra boosted the price of ETH as this upgrade improves the network’s scalability and reduces transaction costs.
Pectra could also make ETH a deflationary token, meaning that its circulating supply could start to shrink at some point as now a portion of the ETH tokens used to pay for gas fees will be burned.
Moreover, layer-two scaling protocols like Arbitrum can now function more efficiently as Pectra increases the number of blobs from 6 to 9. This is a technical term that refers to the amount of data that can be added to a single ETH block.
ETH Hits Ceiling at $2,850, But Buyers Are Accumulating
ETH seems to have found strong selling pressure at $2,750 as the rally momentum indicators have surged to extreme levels.
The Relative Strength Index (RSI) has just stepped out of overbought levels and crossed below the 14-day simple moving average, indicating that the uptrend has weakened.
Similarly, the MACD’s histogram has been trending lower for nearly a week while the MACD line is about to send a sell signal.
However, there has been some significant selling pressure in the past couple of sessions that has managed to push ETH to higher levels despite some bearish activity.
This is often interpreted as the beginning of a phase of accumulation and anticipates the continuation of the uptrend, after perhaps a mild pullback.
Two key areas of support to watch would be the 21-day exponential moving average (EMA) and the 200-day EMA. These two are en route to collide soon and, if the 21-day EMA crosses above its longer-term peer, this would provide another buy signal known as a ‘golden cross.’
Golden crosses are among the most powerful buy signals in technical analysis, especially in the daily chart.
The next resistance to watch if the uptrend resumes would be the $2,875 level and then $3,000 as the most relevant psychological resistance area for ETH in sight.
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