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Such a substantial volume of short positions typically exerts downward pressure on the asset, as selling activities dominate the market. However, contrary to these expectations, ETH experienced a swift price recovery, rebounding from $2,604 to a high of $2,698.
This rapid reversal suggests the occurrence of a short squeeze, where traders who bet against ETH were compelled to close their positions, thereby driving the price upward.
Despite the record-breaking short positions, the bears have not managed to seize control of the market, and ETH continues to trade within a range, reflecting a balance between bullish and bearish forces.
ETH Price Analysis
The 4-hour chart of Ethereum shows the asset trading within a well-defined descending channel, following a corrective WXY structure. The corrective wave culminated in a low near $2,500, aligning with the 0.5 Fibonacci retracement level from the prior impulsive wave. This level acted as a pivotal support zone, preventing a deeper decline, despite the price spiking down to $2,125 area.
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