Since December 16, within one week, the Ethereum price surged from $83 to $138, by just over 66 percent.
Throughout the past week, Ethereum (ETH) has seen a record-high number of shorts on major cryptocurrency trading platforms in the likes of BitMEX and Bitfinex.
As the price of Ethereum surged amidst a strong corrective rally triggered by oversold conditions, short contracts were squeezed out, allowing the price of the asset to recover.
Not All Positive For Ethereum
Although the Ethereum price has increased by 66 percent in a short period of time, it is still down 91 percent from its all-time high at $1,448.
In traditional markets, a 20 percent drop from an all-time high is considered a bear market. As such, even with a massive corrective rally, Ethereum and the rest of the cryptocurrency market are in a bear market and struggling to recover out of it.
A sudden breakout of major resistance levels can also leave an asset vulnerable to large drops in the short-term, especially if it cannot be sustained with high volume.
Hsaka, a cryptocurrency technical analyst, suggested that Ethereum is a better asset to short because of its high volatility and recent rally.
“Quite a substantial difference between the ETH and BTC structure. If you were betting on correlation remaining the same, and both reverting to structural equilibrium, $ETH seems to be the better play for shorts, and BTC for longs,” the analyst said.
Currently, a cryptocurrency trader with the online alias “The Crypto Dog” explained that Bitcoin is facing several major resistance levels in the range of $4,000 to $6,000 and until the dominant cryptocurrency breaks out of that range, it is difficult to call a bottom in the cryptocurrency market.
The trader said:
$4,000 – $4,500 is major resistance and we could stall out soon. It’s also possible this could go higher, but I do not think it goes much higher than $5,400, certainly not higher than $6,300.
In the second half of December, Bitcoin, Ethereum, Bitcoin Cash, Ripple, and many crypto assets experienced relatively large gains against the U.S. dollar.
An ideal scenario for the cryptocurrency market is a gradual increase in value from the current point to January of next year so that the market can enter 2019 with a positive sentiment.
Can the Crypto Market Sustain Momentum?
Prior to Ethereum’s 66 percent rally, the Bitcoin Cash price tripled from $75 to $238, and the price of Bitcoin surged from $3,210 to $4,000.
Major crypto assets have been demonstrating strong daily volumes, with the daily volume of the crypto market surpassing $20 billion. As long as Bitcoin and Ethereum can sustain their volumes, small market cap cryptocurrencies are likely to follow the price trend of the two digital assets.
As Joseph Lubin, the co-founder of Ethereum, said:
I am calling the crypto bottom of 2018. This bottom is marked by an epic amount of fear, uncertainty, and doubt from our friends in the 4th and crypto-5th estates.
Featured Image from Shutterstock. Charts from TradingView.
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