Ethereum (ETH) has staged a notable recovery over the past week, climbing roughly 10% as broader cryptocurrency market sentiment improved. The second-largest digital asset briefly breached the $1,800 mark, but has since struggled to maintain that level, raising questions about the sustainability of the rally.
Derivatives Market Shows Cautious Optimism
A key driver behind the rebound has been the turnaround in Ethereum's Net Taker Volume, an indicator that measures the difference between buying and selling activity in ETH perpetual futures markets. Positive readings suggest buyers are dominating trading activity, while negative values indicate stronger selling pressure. The metric flipped back into positive territory on June 28, and since then, ETH has rallied nearly 14%, highlighting a shift in short-term market sentiment.
Despite the price recovery, derivatives data suggest traders are not aggressively increasing leveraged positions. Ethereum's Open Interest (OI) has remained relatively unchanged throughout the rally, while the Estimated Leverage Ratio—which compares futures open interest with exchange reserves—has yet to recover meaningfully following its decline in June. This indicates that the rally has been driven primarily by spot demand rather than excessive leverage, making it less vulnerable to sharp liquidation-driven corrections. However, the muted growth in leverage also reflects lingering caution among bullish traders, many of whom appear hesitant to commit to larger long positions until the market confirms a stronger upward trend.
Institutional and US Demand Improving
Market sentiment in the United States has strengthened following softer-than-expected labor market data released last week. Although the Ethereum Coinbase Premium Index, which tracks demand from US investors, remains below zero, it has recovered significantly from the deeply negative levels recorded at the start of July. This improvement suggests that selling pressure from US-based traders is gradually easing.
Institutional demand has also shown encouraging signs. According to CoinGlass, US spot Ethereum exchange-traded funds (ETFs) have recorded four consecutive trading sessions of net inflows, reflecting renewed investor interest in ETH. This aligns with broader market trends, as seen in other sectors such as Tesla's recent slip amid AI ambitions and merger hurdles.
Technical Outlook: 50-Day EMA Remains a Major Barrier
On the daily chart, ETH remains capped below key moving averages. The liquidation heatmap reveals that Ethereum recorded approximately $76.2 million in liquidations over the past 24 hours, with $47.6 million coming from long positions. The large number of long liquidations reflects traders being forced to close bullish bets as ETH dipped lower.
Even so, Ethereum's broader technical structure remains challenging. On the 4-hour chart, ETH continues to trade below both its 50-day Exponential Moving Average (EMA) at $1,806 and its 100-day EMA at $1,970, indicating that the medium-term trend has yet to turn decisively bullish.
Momentum indicators present a mixed picture. The Relative Strength Index (RSI) sits at 58, suggesting improving momentum without entering overbought territory. Meanwhile, the MACD lines are also within the neutral territory, indicating indecision among traders.
Key Levels to Watch
Ethereum's first major resistance lies around $1,806, where the 50-day EMA aligns with a key horizontal resistance zone. If buyers manage to break above this level, attention will shift to $1,909, followed by the 100-day EMA at $1,970. Additional resistance levels are located around $2,018, $2,108, and $2,211, each representing potential obstacles to a sustained bullish breakout.
On the downside, immediate support is found near $1,741, followed by the 20-day EMA at $1,713. Should selling pressure intensify, ETH could retest lower support levels around $1,524 and $1,405, while $1,156 remains a significant long-term support area if the broader correction resumes. For context, similar technical patterns have been observed in other assets, such as Rivian's breakout from an inverted head-and-shoulders pattern.
In summary, Ethereum's 10% rebound is a positive sign, but the $1,800 barrier remains a critical test. The rally's reliance on spot demand rather than leverage is encouraging, but the lack of aggressive bullish positioning and persistent technical resistance suggest that a sustained breakout is not yet assured. Traders should monitor the 50-day EMA and key support levels for further direction.
This article is for informational purposes only and does not constitute financial advice.
