Short Squeeze Creates Temporary Relief
Ethereum’s recent bounce to $3,460 feels like a welcome change after weeks of steady decline. But I think we need to be careful here. The 5% daily jump looks promising on the surface, yet some analysts are calling it deceptive.
What’s happening is a classic short squeeze situation. When traders bet against ETH and get forced to close their positions, it creates artificial buying pressure. Over $133 million in ETH positions were liquidated recently, which explains the temporary price boost. But this isn’t necessarily real buying interest – it’s more like a market mechanism cleaning itself up.
Analyst Warns of False Signal
Crypto analyst Ted suggests this recovery might be what traders call a “false signal.” He’s been watching the charts closely and believes Ethereum could face one more significant drop before any real recovery begins.
The market structure still looks heavy to him. Those resistance zones between $3,700 and $3,800 keep rejecting price advances. Until Ethereum can convincingly break through those levels and turn them into support, the overall trend remains bearish.
Potential Price Levels to Watch
Ted’s analysis points to a potential drop toward the $2,900-$3,200 support zone. That area has held up before, but if it breaks, things could get worse. He’s talking about a possible slide down to $2,800 before finding solid ground.
Right now, the $3,200 level is crucial. If ETH can hold above that, bulls might have a chance to rebuild momentum. But if it slips below, we could see another wave of selling pressure.
As I write this, ETH is trading around $3,446, showing that 5.2% jump from yesterday. The question is whether this momentum has staying power or if it’s just a temporary reprieve before the next move.
Traders should probably keep an eye on those key levels. The $3,200 mark seems to be the line in the sand for many analysts. Above it, there’s hope. Below it, things could get messy.
It’s worth remembering that crypto markets are notoriously volatile. What looks like a clear trend one day can reverse the next. But for now, the cautious approach seems to be watching and waiting rather than jumping in with both feet.
