Ethereum price pattern suggests 20% rise amid rising leverage risk

Ethereum’s price is trading around $2,260 at press time, after rising about 15% over the past seven days. The rally follows a steady recovery from February lows and is now pushing the asset towards a key technical resistance zone.

The bullish price structure forming on the 12-hour chart suggests that Ethereum may be preparing for a bigger move. However, several on-chain and derivative indicators are showing both supportive signals and potential risks.

Ethereum’s bullish price structure suggests a 20% rise

The 12-hour chart shows Ethereum forming an inverted head-and-shoulders pattern, and traders often interpret this structure as a bullish reversal setup.

If the price sustains above the neckline of the pattern, the pattern’s measured movement targets an increase of approximately 20%.

Ethereum has already moved sharply towards this neckline after rebounding from the right shoulder zone and appears to have crossed it at the time of this article. However, breakouts from chart patterns are not always successful. Failures can also occur when investors start taking profits or when leveraged traders crowd into the same position.

Therefore, it is important to assess how the owners on the network are currently behaving.

Ethereum’s profitability turns positive as the number of long-term holders increases

One metric that helps explain broader investor sentiment is Net Unrealized Gain/Loss, commonly referred to as NUPL.

NUPL measures whether the average Ethereum holder is enjoying profit or loss. When this indicator becomes positive, it means that the investor is holding the coin with unrealized gains. Historically, this increases the likelihood of selling pressure as traders may choose to lock in profits.

Ethereum’s NUPL remained negative for most of February. On February 5th, this indicator dropped to around -0.21, indicating a severe capitulation with most investors holding the coin at a loss.

Recently, this indicator has returned to positive territory and currently sits around 0.006 (for the first time since its last positive value on February 2). This shift signals the market moving from capitulation to an early “hope and fear” stage, and profits begin to emerge again across the network.

Typically, rising earnings can prompt investors to sell if there is no confidence in the upside. However, the risk largely depends on whether long-term holders are diversifying or accumulating their positions, i.e. whether they have faith or not.

The Hodler Net Position Change metric provides insight into its behavior. This indicator tracks 30-day rolling changes in coins held by long-term investors.

On February 24th, long-term holders had added approximately $9,454. $ETH. Since then, accumulation has accelerated dramatically. By mid-March, this indicator had risen to approximately 523,513. $ETH.

This represents an increase in net accumulation of over 5,400%. Such a sharp change suggests that long-term investors are regaining confidence and increasing their positions rather than reducing their exposure during the rally. NUPL’s surrender in early February did not bear this out. At this point, Hodlers became a net seller.

When long-term holders accumulate while profitability increases, it often indicates that investors expect future price increases. However, if the derivatives market overheats, spot accumulation alone will not be enough to sustain the rally.

Rising leverage increases risk as whale accumulation strengthens

The Ethereum derivatives market has shown increased leverage in recent price movements.

Open interest (OI), which tracks the total amount of active futures contracts, increased from about $9.42 billion on March 9 to about $11.75 billion in recent days. This corresponds to an increase of approximately 25%. The funding rate is also positive at 0.009 compared to early March.

The rise in OI due to positive funding suggests that traders are adding long leveraged positions. This could create a risk of a long squeeze. $ETH Prices will be corrected even slightly.

At the same time, large Ethereum holders are expanding their positions.

On-chain data shows Whale wallet holdings have increased from approximately 113.46 million $ETH Approximately 121.47 million people on March 12th $ETH recently. This corresponds to an increase of approximately 8.01 million people. $ETH.

At current prices, that additional supply equates to approximately $18 billion worth of Ethereum. But recent whale activity contains additional nuances. 20,000 recently moved in a large transaction $ETHfrom the standard Coinbase wallet to the Coinbase Prime infrastructure, is worth approximately $44.9 million.

Importantly, the whale supply metric used in the analysis tracks the amount of supply held by whales, excluding exchange wallets. This means that the data measures balances in large personal wallets, rather than coins held on trading platforms.

As a result, institutional investments in Coinbase Prime do not directly change whale supply metrics. Therefore, the accumulation trend exhibited by this indicator reflects a broader increase in off-exchange holdings, independent of movements in the institutional infrastructure.

Taken together, these signals suggest that while long leverage is increasing, spot demand from large holders continues to support Ethereum’s recovery.

Ethereum price levels that could determine the next move

Ethereum is currently at a critical technological crossroads.

The first level to watch is neckline resistance, followed by the technical hurdle at $2,320. A sustained move above this level will confirm the strength behind the inverted head-and-shoulders breakout.

If Ethereum clears this resistance, the next major level will emerge around $2,570. A breakout of this zone could pave the way for the pattern’s expected target near $2,730. If the bullish momentum remains strong, Ethereum could even extend its move towards the $2,990 area in the short term.

However, downside risk still exists if leverage starts to loosen or investors start taking profits. The first significant support level is located near $2,160, coinciding with the 0.618 Fibonacci retracement level. Additional support appears to be around $2,070.

A further decline towards $1,910 would weaken the bullish pattern and suggest a potential rupture of the inverted head-and-shoulders structure.

For now, Ethereum’s price structure indicates a potential breakout. However, whether the 20% increase is realized will depend on strong shareholder conviction and whale demand to absorb the volatility from increased leverage.

The article Ethereum Price Pattern Suggests 20% Rise Amid Rising Leverage Risk appeared first on BeInCrypto.