Top Analyst Forecasts Ethereum (ETH) Short Squeeze, Says Crypto May Play Into Stock Market
A closely watched crypto analyst believes that Ethereum (ETH) could be preparing for a rally on its way to liquidating traders who are bearish on the leading smart contract platform.
In a new blog post, Justin Bennett says the S&P 500’s (SPX) rally on Friday could hint at the near-term performance of the crypto markets.
According to the analyst, crypto tends to follow in the footsteps of the stock market, but there seems to be a lag between the two asset classes. Bennett adds that if crypto takes cues from stocks, he sees Ethereum taking out resistance at $1,840.
Bennett says an Ethereum breakout could trigger a short squeeze as he notes there is a “significant cluster” of short liquidations up to the $2,000 price level for ETH.
A short squeeze occurs when a large number of traders who have shorted an asset decide to cut their losses in response to an unexpected price increase. The hug then triggers several spells.
says Bennett,
“It might be obvious, since cryptocurrencies like to target those areas and $2,030 is the August 2022 high. Far more long liquidations are below today’s levels, but proximity is important, so the short liquidations up to $2000 could affect ETH in the short term.”
However, Bennett says the clock is ticking for crypto and Ethereum. According to the trader, the Ethereum short squeeze must happen in the coming days. Otherwise, he says, the rally may not materialize at all.
“However, I would like to see the crypto game ‘rediscover’ stocks sooner rather than later if this is to be realized.
If we don’t see ETH flush these shorts in the next few days, it’s less likely to happen.”
At the time of writing, Ethereum is trading at $1,818.
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