Ethereum (ETH) and other altcoins have been on a roll for the past few days. In the weeks and months leading to this strong rally or staged pumps, the altcoin market suffered a lot. The daily chart for Ethereum Dominance (ETH.D) shows how Ethereum (ETH)’s dominance had been in a steady decline. It made sense to see some short term relief but now this rally has gone too far too soon which ends in blood for the average trader most of the time. It is very alarming that people are this bullish on altcoins when Bitcoin (BTC) is ready to decline further. This short term bullishness could keep the bulls excited for a while but we have a history of such pumps being followed by sharp dumps in this market especially when the market is on the cusp of another downtrend.
The recent price action shows us how “decentralized” this market really is. You might think that it’s people trading against each other that controls the price of Ethereum (ETH) but how can that be when both the bulls and the bears are this surprised by the recent moves. Clearly, it is the whales and market makers playing both sides to their advantage. There is less than 20% Ethereum bears in the market at the moment which gives the market makers little incentive to shake them out. However, the bullish sentiment is still too strong and they want to capitalize on that trapping in as much bulls as possible before they pull the plugs. They have been successful at doing this as Ethereum (ETH) longs are now higher than 80%.
The 4H chart for ETH/USD shows how the price has been tearing upwards slaughtering bears along the way and pumping through key resistance levels like knife through butter. All of this sounds very exciting for the bulls to hear but they don’t realize what they stand to lose if the market starts to head downwards from here. It might take time for the price to pump upwards but it doesn’t take much time for the price to dump. The reason being that to pump the price the market makers are on their own because not many bulls are ready to buy unless they see some big green candles.
However, during dumps, the market makers just have to paint a few red candles and traders take it from there as they panic sell. Ethereum (ETH) has finally broken past $200. A lot of people have been eyeing this level for a number of reasons. For the bears this was the sweetest spot ever to short. I mentioned in one of my analyses on ETH/USD that traders might want to wait for $200 to go big on short selling. Just as you wouldn’t buy in one go, it is better to not short sell in one go and keep looking for favorable entries. Ethereum (ETH) remains a very lucrative short at this point considering more than 80% of the traders are long and less than 20% are short.