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Recent reports have revealed that Ethereum has had a rough performance, underperforming other major cryptocurrencies. Despite this, there may be some positive signs on the horizon.
According to CryptoQuant analyst Percival, Ethereum’s open interest has increased significantly, indicating growing investor optimism about a potential rally.
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Ethereum rally potential and profit of longs
According to data shared by Percival, Ethereum open interest stands at $9.6 billion, an increase of 28.57% from August, although it is still lower than the $13 billion recorded in June.
Rising open interest portends higher prices, with many traders positioning for increased demand.
Percival noted that several factors, including possible interest rate cuts from the Federal Reserve and increasing attention to the future of tokenization on the Ethereum blockchain, could fuel this rise.
This change could spark more interest in decentralized finance (DeFi) protocols, making Ethereum more attractive to investors looking for long-term gains.
Percival also pointed out that Ethereum’s relative strength index (RSI) is 61, suggesting that the market is overheated.
A “convergence” between open interest levels and RSI levels indicates that price corrections will likely be short-lived, providing traders with the opportunity to position themselves for a market rebound.
The analyst estimated that Ethereum could see a correction of around 7-9% before rebounding again, favoring long positions as traders await a potential rise in price and demand.
The analyst notably wrote in an article on the CryptoQuant QuickTake platform:
The convergence of the RSI’s highest lows suggests a less pronounced correction potential, estimated between 7% and 9%. This scenario favors long positions, with traders patiently waiting for a market rebound to confirm new highs and higher lows.
ETH’s Path to a Bullish Breakout
At the time of writing, Ethereum is trading at $2,611, down slightly by 0.1% over the past 24 hours. This comes after a strong week in which the cryptocurrency saw an increase of 9.3% and almost 15% over the past month.
According to another prominent crypto analyst, Ali, Ethereum could be on the verge of a significant rally. In a recent article on X, Ali revealed that Ethereum recently touched the lower boundary of a channel, a level that has historically led to an average price rise of 130%.
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According to Ali, if this trend continues, Ethereum could potentially climb as high as $6,000 as long as it maintains its key support level of $2,300.
Each bounce off the lower boundary of this channel has historically resulted in an average price increase of 130% for #Ethereum.
If this trend continues, a similar movement could push $ETH to $6,000, provided the key support level of $2,300 remains intact. pic.twitter.com/CFpLrQWEih
– Ali (@ali_charts) October 14, 2024
So far, despite the volatility in the ETH market, the asset has managed to keep its price above the critical support level of $2,300, lending credibility to the theory that a breakout bullishness could be on the way.
Featured image created with DALL-E, chart from TradingView
