Will the price of Ethereum bounce back strongly?

The price of Ethereum (ETH) has just ended the trading week with a strong downtrend, falling more than 15%. This decline is mainly due to market shock from the factors related to Trump on Friday.

The latest data suggests that the price action of ETH may be on the verge of a rapid recovery, although concerns about rising tariffs still persist. According to information from the order book, whales have recorded approximately 45 million USD in inflows over the past 24 hours.

The situation has become more interesting in the derivatives segment, where whales have taken long positions in ETH worth around 3.3 billion USD during the same period. This indicates that whales are betting on the possibility of a price recovery.

On the contrary, on Thursday, the price of ETH experienced over 677 million USD in outflows, marking the highest daily outflow in recent history. Spot flows remained negative over the past 24 hours, with around 234 million USD, indicating a significant fall compared to Friday.

However, some observations also indicate the potential for demand recovery in the future.

ETH price encounters support on an important historical upward trend line

The price of ETH has established an upward support range since April, which has supported its bottom range after each major correction this year. It has bounced off the same support line at least a few times in the past.

The ETH bear team has stopped on the same upward trend after the crash on Friday, and this has been followed by a recovery attempt thanks to some accumulated volume.

The price of ETH has fallen to a low of 3,510 USD but has quickly recovered to 3,741 USD at the current time.

ETH Price | Source: TradingViewThe price of ETH has also formed a bullish divergence with the RSI indicator. The most recent local bottom of ETH is lower than the previous local bottom on September 25, while the RSI indicator is slightly higher than that time.

Do Ethereum bulls still have many opportunities for growth?

Cryptocurrency analyst Dan Gambardello pointed out that ETH has received strong liquidity from institutions over the past few weeks. He emphasized that it is unlikely that institutions would make this move just to see the price fall right now, especially as the business cycle enters a phase of abundant liquidity.

Gambardello also noted that the recent price action of ETH reflects its performance during the period of August-September 2020, with similarities including consolidation on the chart.

The price of ETH has begun a strong upward trend after the August-September 2020 cycle. If it maintains this historical correlation, then ETH may be on the verge of entering another bullish phase in the coming weeks or months.

The recent unexpected crash seems to have no significant impact on Ethereum exchange reserves. This reserve has fallen to 15.9 million in the past 24 hours, marking the lowest level in many years.

Ethereum reserves on exchanges | Source: CryptoQuantThe decrease in reserves confirms that ETH is still flowing out of exchanges, which is another observation supporting the long-term uptrend, while also signaling that demand still exists. The recent crash turned out to be another market-shaking event, but this time it occurred on a large scale with heavy liquidations.

The crash also exposed how smart investment funds have manipulated the market. A new account created on Hyperliquid recorded profits exceeding 72 million USD from a short position executed at the right time.

Account set up short Ethereum | Source: HyperliquidAdditionally, some new accounts have also achieved unusually high profits, including accounts taking short positions on Bitcoin. Analysts believe that these addresses may be related to insider trading.

Mr. Teacher