Panic and Greed Are Shaping Ethereum’s Price: What’s Next?

Ethereum is experiencing significant price volatility driven by a cycle of extreme greed and panic among traders. Analysts observe that this pattern reflects a market under stress, primarily supported by leverage rather than real spot demand. Recent data from analytics firm Santiment highlighted that Ethereum's price movements correlate with fluctuations in funding rates, revealing a predictable cycle of local highs and lows. For instance, a recent analysis showed that after a drop to $3,800, Ethereum saw a 11.5% rally to $4,700, demonstrating how liquidations of shorts and longs influence market momentum. Trading behavior suggests a tendency for traders to aggressively buy dips, leaving the market vulnerable to sharp declines if upward momentum fails. Experts predict that to break this cycle, there must be an influx of spot buying to replace the prevailing leverage-driven actions. As Ethereum continues to trade at approximately $3,834, volatility is expected to persist unless there is a reset in market positioning linked to genuine demand rather than speculative trading.

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