Is Ethereum Price Due for a Major Rally?

The Ethereum native cryptocurrency achieved a considerable uptick so far this month. However, many analysts feel that it has underperformed compared to some of its rivals.

Ethereum price enjoyed a moderate uptick so far this month. But many feel that it has underperformed compared to some of its rivals. Could this be about to change?

There are multiple signs that point to the possibility of a major ETH rally. For starters, Ethereum futures open interest recently soared to its highest level in its entire history. It peaked at $21.22 billion in the last 24 hours.

This is not the first time that ETH futures open interest surged to record highs. But it is interesting to note that ETH has been experiencing higher open interest in 2024 compared to the previous bull run.

For example, its previous peak was $17.09 billion at the end of May 2024. This was higher than its $13.08 billion peak in November 2021.

But how will this ETH open interest surge affect the cryptocurrency? Well, open interest is a double-edged sword because it could not only indicate demand but also sell pressure in the form of shorts.

According to Coinglass, ETH shorts were notably higher than longs in the last 3 days. This indicates rising expectations of sell pressure after the cryptocurrency’s bullish momentum ground to a halt during the weekend.

Will ETH Price Be Subject to a Pullback or Another Rally?

It is clear why some would expect a bearish outcome judging by ETH’s recent price action. Zooming out reveals that the cryptocurrency has been trading in a wedge pattern. It recently retested this pattern’s descending resistance line.

Bullish momentum went on recess after previously achieving a significant upside this month. ETH’s recent resistance retest indicates that the cryptocurrency could be headed for some downside.

A substantial pullback could see Ethereum price dip below $3,000 and possibly to $2,600 in case of a major crash. This could eventually lead to a retest of the support line.

While some profit-taking was observed, there were significant reasons to also expect a potential bullish breakout from the consolidation zone.

One of the main reasons was that Ethereum ETFs kicked off this week with positive flows. Roughly $43.2 million worth of inflows was recorded during Monday’s trading session.

ETFs have had a significant impact on market direction recently, especially for Bitcoin. And ETFs are unlikely to buy unless they anticipate some upside. A breakout from the current resistance level could validate the positive ETF flows.

However, there was another major reason for bullish expectations. Bitcoin dominance dipped during the weekend after topping out at 61.53% last week. It hovered at 59.01% at the time of writing.

If Bitcoin dominance continues dipping, it could pave the way for more liquidity flows into ETH. And it is possible that an Ethereum price rally could be on the cards if the Bitcoin dominance continues declining.

Finally, large holder flow data from IntoTheBlock revealed that inflows into large accounts were at 4 week highs.

ETH large holder inflows peaked at 714,430 coins as of 25 November. A sign that there was strong demand from whales despite the recent resistance retest.

Large holder outflows also registered a significant surge on 25 November. However, they peaked at 603,040 ETH which was slightly lower than inflows.

In other words, whale demand was slightly higher than whale sell pressure. And a strong demand resurgence could potentially push ETH price close to the $4,000 before it encounters its next major resistance level.