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Ethereum (ETH) Spikes Massively, Reaching Pivotal Resistance Level

Thu, 02/16/2023 - 17:00
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Arman Shirinyan
Crypto Market Review: With majority of market participants becoming more fearful in past week, number of shorts has been rising
Ethereum (ETH) Spikes Massively, Reaching Pivotal Resistance Level
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Volatility is returning to the cryptocurrency market as a large volume of short orders has been liquidated. Bears, who have been aiming at a market drop in the next few days, are in trouble, as they have to either fund their unprofitable positions or close at a large loss.

Ethereum's unexpected recovery

Ethereum's price has been on a significant rise, surging by 12% in the last 48 hours. The second-largest cryptocurrency has finally reached a pivotal resistance level that will determine its direction in the near future. Whether it will proceed upward, remain at the same price level or dive lower depends on the outcome of this resistance level.

Ethereum chart
Source: TradingView

Recently, Ethereum has been showing an elevated burn rate caused by the surge of the network and development activity. This increased activity on the network is an indication that the Ethereum blockchain is becoming more popular among users and developers.

The elevated burn rate is a positive sign for the cryptocurrency as it decreases the total supply of ETH in circulation. With the diminishing supply, the available offering on the market is shrinking, which can lead to an increase in the asset's price. This phenomenon has been observed before, and the same trend may occur in the future.

MATIC causes surge in liquidations

Polygon (MATIC) has faced elevated liquidation volume following a 15% price surge in the last three days. The price move has resulted in the liquidation of short orders. In the last week, many market participants have been actively shorting most digital assets, as the sentiment on the market has been slowly turning bearish after the recovery rally that began in January could not find any source of funding.

The increase in liquidation volume can be seen as a positive sign for Polygon as it suggests that traders are starting to see the potential for the cryptocurrency to recover. With the recent surge in price, traders are expected to become more optimistic about the future of Polygon.

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In addition, the increased liquidation volume could also attract new traders to the cryptocurrency. As traders become more bullish on Polygon, it is likely that more investors will start to pay attention to the cryptocurrency.

Polygon has been showing strong growth over the past year, and this trend is expected to continue. The cryptocurrency is becoming more popular among developers and users, and this will drive its adoption higher.

Cardano's degraded performance

Cardano (ADA), the fifth largest cryptocurrency by market capitalization, has been struggling to keep up with the market-wide growth experienced by most other assets. While other cryptocurrencies, such as Bitcoin and Ethereum, have been soaring to new highs, ADA has failed to follow the same path.

One of the main reasons behind the poor performance of Cardano could be the drop in network activity, which may have led to an outflow of funds from the cryptocurrency.

Additionally, Cardano has historically been a lagging asset, meaning that it tends to show more volatile performance after the market has already calmed down. While other cryptocurrencies are experiencing a surge in price, ADA may not see the same rally until the market settles.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.