Ethereum has staged a remarkable comeback in recent weeks, with the second-largest cryptocurrency by market cap recording a massive 40% rally last week alone. The price surge has pushed ETH above the psychologically important $2,500 mark, bringing relief to millions of investors who were underwater during the recent market downturn.
The dramatic price action began with a rapid surge from $1,812 to $2,584 between May 8 and May 10. This created three consecutive bullish candles, forming what traders call a “triple white soldier” pattern – a strong bullish signal reflecting increased buying pressure.
This shift marks the fulfillment of growing anticipation for a stronger comeback and a sustained Ethereum bull run. Starting from a two-year low of $1,386 during the tariff wars, the reversal exceeded the March 2 peak at $2,517, completing a “U” shape on the chart known as a rounding bottom pattern.
This pattern signals a trend reversal and suggests potential further gains. Technical analysts estimate the price target by adding the “U” shape’s depth to the breakout point, indicating a possible 81% jump to $4,570.
ETH price is now trading above the 200-day Exponential Moving Average (EMA), a key pivot point that hints at an extension of the bullish trend. The momentum surge has driven the Relative Strength Index (RSI) into the overbought zone, showing strong buyer dominance.
However, this also suggests the possibility of short-term corrections. If Ethereum drops below the support confluence of the 200-day EMA and 50% Fibonacci level near $2,430, the uptrend could be nullified, potentially retesting the 100-day EMA at $2,144.
Liquidation Risks and Profit-Taking Concerns
The current market structure presents both opportunities and risks. According to Coinglass data, a cumulative short liquidation leverage of $786 million sits at $2,586. This means if the bull run continues by an extra 3%, a forced exit of massive bearish positions could trigger a short squeeze, potentially accelerating the price movement upward.
On the flip side, a $715 million long liquidation risk exists at $2,438, just 3% below current prices. This creates a volatile situation where a small movement in either direction could result in sharp price action.
The 6-month ETH liquidation heatmap shows that $2,718 and $2,878 levels are the next sizeable liquidity pockets that could attract prices higher. These levels align with a supply zone at $2,750-$2,820 on the 3-day chart, presenting a potential profit-taking target for traders.
As ETH price crosses above $2,500, IntoTheBlock’s Global In/Out of the Money data shows 6.61 million investors are close to turning their 66.96 million ETH supply profitable. These investors’ purchase prices extend between $2,360 and $2,557, with an average price of $2,462.
As the uptrend crosses the break-even point, crossing above $2,557 will officially tag nearly 67 million ETH as profitable. This could reinforce the ongoing bullish trend, creating a strong support zone as these holders become less likely to sell at a loss.
Spot Demand and ETF Flows Supporting the Rally
Unlike previous market movements driven primarily by leverage, data from Coinalyze shows that the current rally is born from substantial spot demand over the past month. This organic nature means the threat from short-term holders realizing profit is lessened.
The increased spot ETH ETF flows are an early sign of a bullish phase. Almost three weeks ago, ETH rallied 12% in a day, going from $1,580 to $1,770. The next four days saw increased spot ETH demand, although the upward momentum temporarily slowed.
The percent supply in profit metric had fallen to lows not seen since November 2022 but has surged higher during the past three weeks of price action. Importantly, it has not yet reached the 95% threshold that typically indicates overheated market conditions.
The announcement of the Pectra upgrade has attracted more than just retail staking participants. A shift in staking inflow trends points toward increased confidence in post-upgrade Ethereum, providing fundamental support for the price movement.
Falling exchange reserves show that ETH is experiencing accumulation. This indicates signs of an early recovery phase, suggesting the bullish upward push could have room to grow.
As things stand, it remains unclear if ETH can immediately push higher and break above $3,000. The price action evidence suggests that a few weeks of consolidation beneath this level might be necessary to build momentum for the next leg up.
For now, Ethereum continues to hold above $2,500, with bulls anticipating further gains as nearly 67 million ETH approaches profitability and market structure remains favorable.
