Due to the recent downturn in the cryptocurrency market over the weekend, Ethereum (ETH) has produced two Chicago Mercantile Exchange (CME) gaps at $3,000 and $2,600. Crypto expert Ted suggests that a short squeeze could soon drive the price past $3,000, possibly addressing these two CME gaps.
Is An Ethereum Short Squeeze Just Around the Corner?
In the last fortnight, Ethereum has experienced a decline of $70 billion in its overall market capitalization, bringing it down to a market cap of $268 billion at the time of writing. Based on data from the Binance crypto exchange, ETH hit a low of $1,993 on March 4.
While Ethereum is presently trading in the lower $2,000 bracket, analysts believe that a short squeeze could favor ETH bulls. Ted took to X to provide his insights on ETH’s present price movements.
The analyst highlighted that ETH has two major CME gaps to be addressed shortly: one at $3,000 and another at $2,600. Ted remarked that since Q1 2024, ETH has successfully filled all CME gaps, making it plausible for these gaps to be filled soon.
Intense bearish sentiment surrounding ETH may serve as the impetus for a significant short squeeze. The analyst elucidated:
I believe we might soon witness a substantial short squeeze that will address the first CME GAP. Afterward, some consolidation might occur before ETH ascends further.
For those unfamiliar, a CME gap denotes the price discrepancy that arises on Ethereum futures contracts exchanged on the CME when the market closes for the weekend and reopens at a different price point. Traders often monitor these gaps, as ETH has a historical tendency to “fill” them by revisiting the price level where the gap was created.
Similarly, a short squeeze transpires when traders who have shorted an asset are compelled to repurchase their positions as the price rapidly escalates due to unforeseen bullish momentum. This increase in buying pressure can further elevate the asset’s price, prompting liquidations and potentially even more substantial price increases.
Multiple Bullish Signals For ETH, Yet Sentiment Requires Improvement
Fellow crypto trader Merlijn The Trader’s insights seem to coincide with Ted’s. The trader observed that the ETH Relative Strength Index (RSI) is at a “critical level,” pointing out that each time the digital asset has entered this zone, a significant movement has ensued.
Other encouraging signals, including a bullish divergence, also appear to indicate a possible upward shift for Ethereum. However, it would be wise to wait for comparable bullish indicators to emerge on longer timeframes before entering the market.
While these indicators may suggest a possible rally for ETH, the overall sentiment surrounding the digital asset remains quite low. At the time of this writing, ETH is trading at $2,221, reflecting a 1.4% increase in the past 24 hours.
Featured Image from Unsplash.com, Charts from X and TradingView.com
