Ethereum’s rally stalls near $2.58K as holders take profits

After a strong bullish reversal, Ethereum’s momentum appears to be cooling amid massive profit-taking from holders.

Ethereum (ETH) is trading at $2,438 as of press time, down 3.5% in the past 24 hours after a strong 34% rally over the past week. Open interest has decreased by 2%, as per Coinglass data, indicating a reduction of leveraged bets. The decline comes after an intense rally that saw ETH soar from $1,800 to over $2,500 in a matter of days.

According to a May 13 analysis on X by Glassnode, the rapid climb was supported by a lack of resistance between the  $1,800 and $2,500 range. But the rally stalled near $2,580, a critical level where about 1.3 million ETH had previously been amassed. Held supply fell to 1 million ETH as the price got closer to that zone, suggesting that many holders sold close to their break-even point. This led to the recent pullback.

Spot demand, not leverage, appears to be behind Ethereum’s recent rally. In a separate May 12 analysis, CryptoQuant contributer ShayanMarkets noted that Ethereum’s funding rates, which reflect sentiment in the futures market, have stayed flat. That indicates that the spot market, not traders using borrowed funds, accounted for the majority of the buying pressure. 

Since it lowers the risk of sudden crashes brought on by mass liquidations, this is usually a good sign. Still, for the uptrend to continue, funding rates may need to rise slightly to demonstrate that futures traders are also gaining confidence.

Looking at the technical picture, Ethereum is showing signs of short-term exhaustion. The daily relative strength index is at 75, which is in the overbought zone. That could mean a pause or pullback is ahead. 

However, key moving averages are still the bulls’ favor. Ethereum is holding above all short- and mid-term EMAs and SMAs, including the 10-, 20-, 30-, 50-, and 100-day averages. The moving average convergence divergence is positive at 187.5, indicating continued upward momentum.

Resistance is currently around the $2,474 level. A sustained break above this line could open the door to further gains. On the flip side, a correction back toward the $2,200 support range might occur if the price fails to stay above $2,400.

In the coming days, traders will be watching to see if Ethereum can break above $2,580 or if the recent rally cools off into a deeper correction.