Ethereum Breaks Five-Month Downtrend, Surges 47% in Five Days

Ethereum, the largest altcoin by market capitalization, has been on a remarkable upward trajectory, gaining 47% in just five days.

The cryptocurrency market has seen a shift in favor of altcoins, with the total value of the top 10 altcoins increasing by $232 billion over the past six days, while Bitcoin's market dominance has decreased from 65.36% to 62.38%.

During this period, Bitcoin experienced a 7.9% rise, while Ethereum, the largest altcoin, surged by 47%, reclaiming the crucial $2,200-$3,900 macro range that it lost in March.

This recovery from its 18-month low of $1,380 began in late April when ETH jumped toward the $1,800 resistance before breaking out last Thursday.

The cryptocurrency broke past several key resistance levels, including $2,000, $2,100, and $2,300, before testing the $2,600 level over the weekend. ETH reached a two-month high of $2,624 on Monday.

According to technical analysis, the On-Balance Volume (OBV) indicator has reversed its downtrend, which started in March, suggesting that buyers are now in control of the market.

Moreover, the Chaikin Money Flow (CMF) reading stands at +0.25, which is a high value that points to heavy capital inflows, while the Money Flow Index (MFI) is also increasing, further confirming the bullish momentum.

Despite the strong rally, market analysts expect Ethereum to move sideways in the short term before making its next significant move. Many believe the $2,400-$2,700 zone will likely be ETH’s trading range for the upcoming days.

The 6-month liquidation heatmap shows that the $2.9k region is a strong magnetic zone that should pull Ethereum higher soon. However, a breakout beyond the $3,000 psychological resistance is not guaranteed.

For ETH to push past $3,000, bullish Bitcoin movement and favorable macroeconomic conditions might need to align with Ethereum's approach to the $2.9k level.

The 1-month liquidation heatmap shows Ethereum consolidating around $1.8k in early May, triggering short liquidations at $1.9k before moving higher. A similar but less intense pattern has emerged in recent days.

As many traders and investors are now exiting their positions, it’s crucial to note that the liquidation map highlights a lack of short liquidations overhead, but high leverage long positions are open. A drop to the $2.4k and $2.5k levels could wipe out many of these positions.

This suggests that traders should be cautious of a possible downward liquidity hunt. Some analysts warn that if Ethereum loses its current support, it could drop to $2,300 or even below the $2,100 level.

The cryptocurrency has filled the $2,530-$2,630 Daily CME Gap created in March. It has also formed two small CME Gaps at the $2,300-$2,400 and $2,100-$2,200 levels, which could be closed soon.

Some market watchers believe Ethereum intends to fill its Macro CME Gap between $2,900 and $3,350, signaling that a surge toward those levels could be ahead.

As whale selling activity has increased recently, traders and investors may consider booking profits and preparing for a potential retracement. At the time of writing, Ethereum trades at $2,597, showing a 5% increase in the daily timeframe.

Liquidity has built up near the $2.7k zone, with ETH already claiming some of it. Over the coming days or weeks, further consolidation below $2.8k is possible before a rally.

The Pectra upgrade has attracted interest beyond retail investors. However, it has also witnessed selling pressure with whale deposits into centralized exchanges.

The crucial factor for short-term bullish continuation is for Ethereum to break past the $2,600 resistance. The next horizontal level to watch out for is around the $2,850-$2,900 range, a significant support and resistance area from previous market movements.