Ethereum Faces Short-Squeeze Risk: Rising Leverage and Key Resistance at $2.7K

Ethereum traded to near $2,750 on Monday, Oct. 21, rising amid broader gains for the crypto market as Bitcoin shot past $69,000. However, with BTC

Price analysis on Monday, Oct. 21, saw Ethereum price showing signs of weakness after a rally that saw the second-largest crypto hit resistance at $2.7k. However, a CryptoQuant analysis now suggests that a short squeeze scenario may be on the cards for the top altcoin.

After a weekend that saw Bitcoin price rally past $69k, crypto markets began the new week on the back foot.

After hitting highs of $2,747 on Monday, Ethereum price dropped sharply. At one point, ETH price dropped to lows of $2,590 as the bears attempted to continue last week’s market sell-off.

But as highlighted in previous analysis, the bears were unable to continue the sell-off last week, with support at $2.4k preventing further losses.

Despite the bearish market sentiment, ether price began to recover on Monday.

After testing support at $2.6k, ETH price rallied to highs of $2,630. At the time of writing, ether price trades around $2,624.

Ethereum price risks short squeeze as leverage rises

Analysis now suggests that ether price could be set to rally further and stage a short squeeze scenario.

According to CryptoQuant analysis, the futures market is now considered ‘overheated’ due to high leverage.

“With leverage at concerning levels, the futures market is now considered overheated,” CryptoQuant analyst Shayan B said.

This leaves the market vulnerable to a potential short squeeze event, the analysis adds.

In such an event, if ETH price rises unexpectedly, traders with short positions will be forced to cover their positions by buying back ETH, which will create an impulsive price spike.

However, the key level to watch remains at the 100-day moving average, which is currently around $2,700. This area presents a notable resistance that bulls may have to conquer to see further gains.

Highlight on crypto liquidations as longs get rekt

Data from Coinglass showed total 24-hour crypto liquidations stood at over $165 million.

Out of this, about 75% were longs liquidated over the past 24 hours at $129 million. Meanwhile, shorts accounted for about $36 million.

Looking at Ethereum, data showed longs accounted for $36 million of the total $39 million liquidated over the past 24 hours.

Ethereum price reached its year-to-date peak of $4,070 in March.

The above is the detailed content of Ethereum Faces Short-Squeeze Risk: Rising Leverage and Key Resistance at $2.7K. For more information, please follow other related articles on the PHP Chinese website!