Ethereum (ETH) has rebounded strongly off the $2,200 level and recaptured a key price zone yesterday in a move that could mark the beginning of a true recovery for the top altcoin.
Trading volumes rose by 43% in the past 24 hours, currently accounting for 5% of the asset’s circulating market cap at $15.4 billion.
Short liquidations rose to nearly $450 million during this period, confirming an ongoing short squeeze. Meanwhile, this metric closed yesterday at a much higher level, nearing $600 million as top cryptocurrencies rallied.
Crude Prices Retreat After Republicans Lose Congress
A strong decline in the price of oil may have been one of the top catalysts driving this market-wide rally.
Crude prices retreated from $100 to $87 at some point during yesterday’s session, following the strong defeat that Republicans, and President Donald Trump, for that matter, experienced during the mid-term elections in the United States.
Losing Congress could prompt the head of state to scale down its rhetoric and hostility toward the Middle East country, as this has resulted in higher inflation for Americans, while it has sunk the President’s popularity.
The market seems to be expecting that attacks may ease in the next few weeks, which could result in lower oil prices, lower inflation, and, potentially, a delayed decision on interest rates.
Thus far, the odds of a rate hike, according to FedWatch, continue to be high at 79% for the December FOMC meeting. If that changes in the next few weeks, it could further boost cryptos’ rally toward higher price levels.
Ethereum Price Forecast
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ETH Is In Bull Market Territory Again as MVRV Ratio Approaches Zero
For ETH, on-chain data is sending encouraging signs, as the MVRV Ratio, a metric that has accurately predicted the beginning of previous bull markets, is once again approaching the zero line.
Following yesterday’s rebound, the MVRV Ratio is now sitting at -1.3%. A first crossover to positive territory confirmed the beginning of a bullish phase, following an early trend reversal prompted by the August rally.
If ETH rises past $2,400 and rallies to $2,800 once again, we could expect the resumption of the token’s mid-September uptrend in the next few weeks.
ETH Taps on Key Liquidity Zone and May Be Heading to $2.8K
Turning to the price chart, we can see that ETH tapped on a huge fair value gap (FVG) left behind during the August spike. This is a market imbalance that potentially holds billions in pending buy orders waiting to be filled.
The strong move that came after this area was hit confirms its technical relevance. If the buying pressure is strong enough, we should witness the continuation of the rally throughout the weekend.
The nearest and most likely target, if that’s the case, would be $2,800, followed by a strong climb above $3,000 that will seal the deal for bulls, as a massive short squeeze will likely occur if the price breaks that psychological barrier.
