The crypto market is undergoing a significant shift. With USDT (Tether) dominance showing signs of breaking down, Ethereum (ETH) is poised for a potential upward move. Here's a detailed analysis of the current crypto landscape, focusing on Ethereum's potential.
Directional Bias: USDT Dominance Breakdown
A decrease in USDT dominance generally indicates that investors are moving funds from stablecoins into other cryptocurrencies. This suggests a potential surge in crypto altcoins, with Ethereum at the forefront of this shift.
Risk Management: Crucial to Success
When entering trades, risk management is key. A risk-to-reward ratio approach is essential for minimizing losses. Calculating trade size and utilizing stop-loss orders are crucial tools to limit potential downsides.
Ethereum's Bullish Outlook
Ethereum is receiving a lot of attention due to its potential upward movement. Several indicators point to Ethereum being primed for a breakout:
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ETH/BTC Ratio: The ETH/BTC ratio is approaching a critical support level. The TD Sequential 9 bottom suggests that the trend could be exhausting, leading to a short-term reversal. A reversal in the ETH/BTC ratio would signal Ethereum outpacing Bitcoin.
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RSI Retest by Benjamin Cowen: The Relative Strength Index (RSI) retest observed by Benjamin Cowen aligns with the analysis, further confirming the bullish sentiment for Ethereum.
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Volume Profile Analysis: The ETH/BTC volume profile reveals significant accumulation in recent times. Higher volume in the current price range indicates smart money positioning for a potential price increase.
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Liquidation Heat Map: A short squeeze could be on the horizon. With $1.61 billion in short liquidations clustered around the $2,117 level for ETH/USD, a price surge above this level could trigger massive upward movement.
Caution on Bitcoin (BTC)
While Ethereum looks promising, Bitcoin (BTC) shows signs of weakness. It is currently in a bearish retest zone, with declining volume suggesting a bull trap. This indicates potential downside risk for Bitcoin, which could negatively impact the altcoin market.
Technical Analysis: Ascending Triangle and Negative Funding Rates
On the hourly timeframe for ETH/USD, an ascending triangle pattern is emerging. A breakout above the previous month's open could lead to a target of $2,000.
Additionally, the presence of negative funding rates on Ethereum is a bullish sign. Negative funding rates mean that traders long on Ethereum are being paid by those who are short. This typically signals strong bullish sentiment for Ethereum.
Trade Setup: How to Position Yourself
A coin-margined perpetual contract (also known as inverse perpetual) is the preferred trade structure. This means Ethereum is used as collateral for the trade rather than USDT, increasing both potential profits and losses.
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Scaled Order Approach: Entering the trade using scaled orders allows for placing multiple orders at different price levels, reducing risk.
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Leverage: A 5x leverage is being utilized to maximize gains.
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Stop Loss: The suggested stop loss is below the key order block or the Monday low, depending on risk tolerance.
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Target: A target of the yearly open is being eyed.
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Important Considerations:
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Leverage: While leverage can amplify profits, it also magnifies losses. Traders must understand the risks before using leverage.
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Promotional Content: Be aware that this article includes promotional content, and the exchange is offering bonuses for sign-ups.
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Trading Risk: Cryptocurrency trading is inherently risky. There are no guarantees, and losses are possible.
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Independent Research: Always conduct your own research before entering any trade.