After struggling below the $4,000 price threshold for months, Ethereum finally broke this significant resistance level on December 6, currently trading at $4,003, up 2.7% in the past day.
However, despite this milestone sparking investor optimism, market indicators suggest there are still potential risks of profit-taking and correction.
Is another major correction on the way?
A CryptoQuant analyst named ShayanBTC recently shared insights on Ethereum's futures market behavior, highlighting a key indicator that suggests caution may be needed.
According to the analyst, Ethereum's taker buy/sell ratio (a key indicator of market sentiment) shows a significant increase in seller activity. This development is consistent with Ethereum approaching the $4,000 resistance level.
This indicator measures the aggressiveness of buyers versus sellers in the futures market, indicating that sellers are taking the lead as prices rise.
Shayan revealed that participants in the Ethereum futures market seem to be locking in profits or preparing for potential price adjustments.
The taker buy/sell ratio has reached its lowest point in months, indicating that market participants tend to favor risk-averse positions.
This trend suggests that aggressive sell orders in the futures market may slow Ethereum's upward momentum, paving the way for potential pullbacks or consolidation phases.
The analyst specifically wrote:
The decrease in the taker buy/sell ratio indicates that as more market participants adopt risk-averse strategies, the upward price trend could slow down. This aligns with expectations of a price pullback or correction phase, so traders must closely monitor further developments in the futures market.
What’s next for Ethereum?
As of the time of writing, Ethereum is still hovering above $4,000, having risen 3.1% in the past day. As of today, this price increase has pushed ETH's market capitalization above $482 billion, with a daily trading volume of about $56.7 billion.
Notably, the decline in the taker buy/sell ratio emphasized by Shayan reflects the overall cautious sentiment of futures market participants, which often precedes increased market volatility.
While this does not necessarily mean the end of Ethereum's upward trend, it underscores the importance of closely monitoring market developments. If selling pressure intensifies, Ethereum may experience a price correction, providing opportunities for newcomers or long-term holders to accumulate at lower levels.
At the same time, from a technical perspective, ETH may be on the verge of a significant price increase, as it recently formed a golden cross (50DMA and 200DMA) on its price chart.
$ETH golden cross (50DMA and 200DMA) has appeared!
The last time this happened, #Ethereum was still in a bear market consolidation phase, yet it rose by 129%.
During the bull market in 2021, the last golden cross caused #ETH to rise by 2,323%.