Market Analysis and Strategy Ethereum Futures Trading

Ethereum (ETH) experienced two consecutive days of declines on Tuesday, October 22, after facing rejection at levels around $2,700 the previous day. The decline was supported by mild outflows of over $20 million in US spot Ethereum Exchange Traded Funds (ETFs).

Moreover, the Estimated Leverage Ratio is high in the market futures ETH indicating an increased likelihood of a short-squeeze scenario occurring.

Is it true Ethereum could experience a short-squeeze?

Ethereum may experience a short-squeeze as the Estimated Leverage Ratio (ELR) increases and trades at 0.39 the highest level since early July. This rising ELR indicates that the futures market is overheating making Ethereum vulnerable to a potential short-squeeze event that could trigger impulse buying and significantly push the price up in the event of an unexpected rise.

Institutional flows also fell slightly at the start of the week. According to Coinglass data, US spot Ethereum ETFs recorded mild outflows of $20.80 million on Monday. CryptoQuant's Coinbase Ethereum Premium Index data shows signs of weakness and remains below neutral levels.

In Ethereum's case, the metric currently stands at -0.039, below the neutral level of zero. For the Ethereum price to rally, the metric must rise above the neutral value of zero.

Ethereum Price Shows Signs of Weakness

At the time of writing on October 24, Ethereum has continued its price decline to now trade around $2,522. If ETH continues its retracement, it could fall further to retest its daily support level of around $2,461.

The Relative Strength Index (RSI) momentum indicator is showing 31, a very low number because the selling trend is much higher than the buying trend. Currently, ETH can even be considered to be experiencing overselling. With the MACD line continuing to decline, Ethereum is certain to experience bearishness shortly.

Conversely, if ETH breaks the descending trend line and closes above $2,820, Ethereum's price could rally to retest the next daily resistance at $2,927.

Ethereum Price Analysis

Ethereum has experienced a price decline in recent weeks. This is largely due to the bearish sentiment in the cryptocurrency market as a whole. However, some special factors have also influenced the price of Ethereum.

One of these factors is the increase in mining activity. When more miners join the Ethereum network, this can increase the supply of new ETH. Increased supply could put downward pressure on prices.

Additionally, increasing gas fees have been a concern for Ethereum users. Gas fees are transaction fees paid to miners for processing transactions. When gas fees are high, this can reduce users' interest in using the Ethereum network, which can hurt the price of ETH.

Ethereum Prospects

Even though Ethereum has experienced a price decline in recent times, many analysts are still bullish on its long-term prospects. Ethereum is the most widely used blockchain platform for decentralized applications (dApps). This platform has a strong ecosystem and continues to grow.

One factor supporting Ethereum's prospects is the increasing adoption of blockchain technology. The more companies and organizations start using blockchain, the more likely it is that Ethereum will become the platform of choice.

Additionally, Ethereum is developing Ethereum 2.0, which is a major update to the platform. This update is expected to improve Ethereum's efficiency and scalability. This can increase the interest of users and investors.

Ethereum Futures Trading Strategy and Risks

If you are interested in trading Ethereum futures, there are several strategies you can use. One strategy is to use technical analysis to identify trading opportunities. Technical analysis involves studying price charts to look for patterns and trends.

Another strategy is to use fundamental analysis. Fundamental analysis involves studying factors that can influence the price of Ethereum, such as mining activity, gas fees, and the development of Ethereum 2.0.

Ethereum futures trading can be very risky. Leverage can magnify both profits and losses. It is important to understand the risks before starting to trade.

Conclusion

Ethereum is an attractive digital asset with long-term growth potential. However, like all investments, Ethereum futures trading also carries risks. It is important to do research and understand the risks before starting trading by checking Ethereum prices regularly on the Bitrue website.

You can also compare prices from ETH to USD easily. Apart from that, you can also do thorough research by staying up to date on the latest Ethereum information via the Bitrue blog.