Is Ethereum ready for a bullish rally or will it remain bearish for a little longer?

Ethereum has been going through a period of stagnation over the last few months, but most investors believe this to be nothing more than a temporary setback on its way to starting a new rally. Many have started looking for platforms where to buy Ethereum in order to consolidate and grow their portfolios before this event. 

However, the current situation has led investors to come up with very different predictions from each other, and while some are convinced that the marketplace will start growing sooner rather than later, others are not as convinced and actually believe that the bearish tendency will remain strong for the foreseeable future. 

20-Month High 

As of November 8th, Ethereum has entered a period of scarcity, paving the way for what investors consider to be the coin’s rally to $6,000. Right now, the metrics are similar to those of the year’s first quarter, when the market turned bullish and there was a 120% increase. ETH recently recorded its largest three-day return in 2024, with a 21% spike, at the beginning of November. 

Some traders have been wondering if there’s a possibility that the heightened leverage levels have the potential to amplify price fluctuations, a scenario in which investors would have to be prepared for even more volatility. The most recent rally mirrored the trends of the larger cryptocurrency market, which recorded overall gains of 8.3%. 

This movement resulted from macroeconomic movements, as the United States saw an interest rate cut, a movement investors had been waiting for and anticipating for a considerable amount of time. The S&P 500 index was also propelled and closed at an all-time high on September 19th. As a general rule, lower interest rates have been associated with lowered costs for companies when it comes to debt issuance. As a result, any concerns regarding a potential stock market correction are alleviated as well. 

Larger Movements 

Macroeconomics and traditional marketplaces have always had an influence on cryptocurrencies. Since digital coins operate as part of entirely decentralized systems, they are often subjected to fluctuations and serious price variations, something that causes many potential investors to steer clear of the market or not engage at the level they would like to out of fear that they will incur very serious capital losses. There are many different factors that influence the ways in which crypto markets operate, including engagement, volumes, and the performances recorded within other markets. 

Right now, many economists are still debating whether the US Federal Reserve is effective at balancing the recession risk with economic growth. Reports showcase continuous uncertainty in this regard, and it is this factor that is causing investors to be extra cautious with the way they’re approaching the market. After the bearish environment of 2022, when prices plummeted by as much as 70%, there are not many who would be willing to make risky moves. Right now, some brands and companies have been dealing with lower shares and earnings due to what is believed to be a weaker industrial economy. 

The inflationary pressure also bears a part of the blame. Many customers have been shipping away from services such as priority shipping, as they are higher and, therefore, unsustainable for many to pay. Operating environments are also becoming more challenging to deal with for many businesses, a feature that adds another layer of trouble for enterprises. 

Ethereum Outlook 

In spite of these factors, many investors believe that the general outlook for Ethereum remains positive. The spike in the futures open interest, which saw it approaching 5 million ETH, is the highest Ether has seen since January 2023. The movement indicates that there is a very strong demand for leveraged positions in the community at the moment. But while there’s no doubting the interest, some have pointed out that there’s no definitive indication that the general sentiment among investors has become bullish, nor that this will be the case in the very near future. 

The derivatives market shows that buyers and sellers are matched for one another but that the amount of demand for leverage continues to fluctuate. It’s also not like this variance exists solely on its own, as it can be seen in the price points of monthly Ethereum futures contracts as well. Although the demand for futures can be seen as a clear result of bullishness, the data doesn’t seem to indicate this so far. The futures premium of the Ethereum market has remained more or less stable at around 6% per year, a little over the neutral area but not something that would typically be considered noteworthy. 

During times when there is a lot of excitement in the marketplace, the indicator can quickly go over 10%. In fact, this happened quite recently, in July. But what does stability mean for the trading environment? Historically, it has meant that investors have little incentive to join a cash-and-carry arbitrage strategy, during which users profit off the price divergence between an asset and its corresponding derivative. A cash-and-carry trade is typically executed by entering a long position while also choosing a short one for the derivative. 

These factors indicate that bearish positions on Ethereum are still the most desirable, and the reason for that is that the futures premium has become more stable. 

Holding 

Holding on to your cryptocurrency and allowing its value to appreciate over time still seems to be the soundest choice you could make. An Ethereum whale investor recently made the news after turning $87K into $40M. The result was possible after an 8-year hold. Back in February 2016, ETH was trading for around $5 per token, and at the time, an investor purchased 16,636 coins for approximately $87,006. After the holding period ended, the account started to sell some of its holdings but still retained more than $38 million in the aftermath. 

Although it can be difficult to avoid carrying out trades more frequently, it pays off in the end and allows you to earn much higher revenue. 

When you’re an investor, there are many things you need to take into account. But when you delve into the world of cryptocurrencies, the first thing that should be on your mind is keeping your portfolio safe. To do this, you must do your research and be aware of the latest changes in the market.