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Ethereum finally broke the $4000 barrier, and this price has become the focus of global investors. This is the fourth time in eight years that it has approached this high level, with each approach accompanied by notable corrections. The year 2021 saw a fall of 65%, and in 2024 there were two declines of over 40%, and it also faced a setback this year in July.
Currently, market participants are monitoring the price direction, with both long and short sides holding massive positions. Sellers hold positions of approximately 6.77 billion Dollars, while buyers have positions reaching up to 12.47 billion Dollars, and the market is poised for an explosion. If the price exceeds 4000 Dollars, this could lead to sellers covering their positions, while if it drops below 3800 Dollars, it could lead to the liquidation of buyers' positions.
The actions of large investors are more complex. An unknown large investor transferred 49 million Dollars worth of Ethereum to the exchange, seemingly preparing to liquidate. At the same time, some institutions are purchasing 40.5 million Dollars worth of Ethereum in the over-the-counter market, while a company has applied for 5 billion Dollars in funding, which may be used to buy the dip. Individual investors face a dilemma: buying Ethereum, they fear buying at high prices, and not buying, they fear missing the opportunity for a rise.
Technical analysts pay attention to the crossover signals between MACD and RSI60, while fundamental analysts focus on the money flows into ETFs and the potential impact of a Federal Reserve interest rate cut. Historical data shows that the likelihood of breaking through $4000 has risen to 85%, with target prices potentially reaching $4200, $4800, or even $5500. However, we should be cautious of the lesson from the 66% drop in Ethereum prices caused by similar selling pressure last December.
Currently, the open interest in the derivatives market has reached its all-time high at 51.3 billion Dollar, with a one-day liquidation volume of 260 million Dollar, 90% of which was liquidation of short positions. The market is in a critical position, which may lead to severe fluctuations.
Despite the uncertainty in the market, most opinions tend to be optimistic about the long-term development of Ethereum. If it can surpass the historical high of 4877 Dollar, this could lead to a new round of strong gains. However, investors still need to be cautious of market risks and view this increasing market cycle with a rational mindset.