One analyst analyzed X on April 26. note Ethereum is likely to surge in the coming sessions as sell-side liquidity on major centralized exchanges like Binance and Coinbase is thinning.
Thin sell side, big potential move for ETH
As seen in order books across CEX, reduced sell-side liquidity means there are few sellers willing to liquidate. Because there are so few sellers on the market, even a small increase in demand could theoretically cause prices to skyrocket.
Nonetheless, market makers can fill this imbalance by taking into account how the market works. At the same time, even if prices remain the same, there is no guarantee that they will rebound.
For example, unlike new meme coins, Ethereum is very liquid. In terms of market capitalization, it is the second largest coin after Bitcoin. This means that billions of dollars will be needed to push the price above the immediate resistance levels of $3,300 and $3,700, as clearly shown on the daily chart.
Ethereum has been under pressure throughout April after falling from its all-time high of $4,090. Looking at the developments on the daily chart, the coin fell 23% from its all-time high and found strong rejection at the mid-BB or 20-day moving average.
Analysts expect buyers to take over and reverse losses in mid-April if expanding volume leads to a comprehensive break above $3,300. Otherwise, ETH risks falling below $2,800 in line with the selloff on April 12th and 13th.
Spot Ethereum ETF launches in Hong Kong, adopts fuel optimism
However, traders are generally optimistic and expect prices to rebound in the coming months. Several factors may cause the price of ETH to rise. The main catalyst is the launch of the highly anticipated spot Ethereum exchange-traded fund (ETF) in Hong Kong. Much like the Spot Bitcoin ETF has on the BTC price, this product for ETH backs the coin, giving traditional investors exposure to the second world’s most valuable coin.
In the United States, the biggest obstacle preventing the Securities and Exchange Commission (SEC) from approving similar products is the uncertainty of ETH classification. On April 25, ConsenSys sued regulators, pressuring them to classify the coin as a commodity.
Even after this product launches by the end of this month, Ethereum’s core strengths will remain intact. Continued adoption of Ethereum and Layer 2 scaling solutions continues. As more protocols choose to be deployed on the smart contract platform, it creates optimism about Ethereum’s long-term viability and growth.
Featured image from Canva, chart from TradingView