Ethereum (ETH) experienced a flash crash on February 2, plummeting to $2,125 before swiftly rebounding to a high of $2,905. This volatility triggered liquidations for both long and short positions, highlighting the current market uncertainty. While ETH currently trades around $2,700, crypto analyst Ali Martinez has identified a critical support level that must hold for Ethereum to sustain its bullish momentum.
Martinez highlighted the $2,238 to $2,614 price range as Ethereum's 'most important' support zone. This range holds significance as approximately 12.18 million crypto wallets acquired 63.07 million ETH within this range. Martinez emphasized that holding this support level is crucial for Ethereum's future price action, regardless of its inflationary or deflationary nature.
The importance of this price level stems from the fact that a significant number of investors and traders bought ETH within this range. This creates a zone of support as these holders are less likely to sell at a loss, providing a floor for the price. Support levels also carry psychological weight, as investors who bought ETH within this range tend to perceive it as a fair valuation, increasing the likelihood that they will defend this level.
Fellow crypto analyst Ted echoed similar sentiments, affirming that Ethereum's long-term outlook remains positive. Ted noted that ETH is still holding the uptrend trendline and recently bounced back from a crucial support level. Additionally, BlackRock's recent $250 million+ investment in ETH is expected to positively impact its price action. Ted believes that ETH could reach $10,000+ in this cycle.
Martinez also highlighted the emergence of a potentially bullish inverse head-and-shoulders pattern on Ethereum's daily chart. For this pattern to validate a bullish breakout, ETH must maintain support above $2,700. If successful, the next upside target could extend as high as $7,000.
Despite these bullish indicators, concerns persist over Ethereum's price action, as the digital asset has significantly underperformed compared to cryptocurrencies like Bitcoin (BTC), SUI, and XRP over the past year. A recent report indicates that large ETH holders may be gradually losing confidence in the asset. Recent analysis suggests that Ethereum may be at risk of an extended downturn in the coming days.
At press time, ETH is trading at $2,774, down 0.9% over the past 24 hours.