After months of struggling below the $4,000 price mark, Ethereum finally breached this notable resistance level on December 6, with a current trading price of $4,003, increasing by 2.7% in the past day.
However, while this milestone has generated optimism among investors, market metrics indicate potential risks of profit-taking and corrections.
Another Major Correction Incoming?
A CryptoQuant analyst known as ShayanBTC has recently shared insights into Ethereum’s futures market behavior, highlighting a key indicator that suggests caution might be warranted.
According to the analyst, Ethereum’s Taker Buy/Sell Ratio, a critical metric for analyzing market sentiment, has shown a substantial increase in sell-side activity. This development aligns with Ethereum’s approach to the $4,000 resistance level.
The metric, which measures the aggressiveness of buyers versus sellers in futures markets, reveals that sellers increasingly dominate trades as the price edges upward.
Shayan disclosed that Ethereum’s futures market participants appear to be locking in profits or preparing for a potential price correction.
The Taker Buy/Sell Ratio has reached its lowest point in several months, indicating that market participants are leaning toward a risk-off stance.
This trend suggests that the aggressive futures market sell orders could slow Ethereum’s upward momentum, paving the way for a potential pullback or consolidation phase.
The analyst particularly wrote:
The drop in the Taker Buy Sell Ratio implies a possible slowdown in upward price movement as more market participants take a risk-off approach. This aligns with anticipating a price pullback or a correction phase, making it crucial for traders to monitor the futures market for further developments.
What Next For Ethereum?
At the time of writing, Ethereum still hovers above $$4,000, up by 3.1% in the past day. This price increase has boosted ETH’s market cap above $482 billion as of today and its daily trading volume to roughly $56.7 billion.
Notably, the drop in the Taker Buy/Sell Ratio highlighted by Shayan reflects an overall cautious sentiment among futures market participants, often a precursor to heightened market volatility.
While this does not necessarily signal the end of Ethereum’s rally, it highlights the importance of closely monitoring market developments. Should the selling pressure intensify, Ethereum may experience a price correction, offering opportunities for new entrants or long-term holders to accumulate at lower levels.
Meanwhile, from a technical perspective, ETH might be on the verge of a major rally as it recently formed a golden cross (50DMA and 200DMA) on its price chart.
$ETH goldencross (50DMA and 200DMA) has occured!
Last time this happened, #Ethereum was still in consolidation stages of the bearmarket but it still went +129%
In the 2021 bullmarket, the last goldencross took #ETH +2,323% pic.twitter.com/Wd7GGMc7O4
— venturefounder (@venturefounder) December 6, 2024
Featured image created with DALL-E, Chart from TradingView
