ETH is making a strong rebound, approaching $4,600! But it won't truly go to da moon until it breaks this key level.

Ethereum (ETH) quickly rebounded after experiencing a “week-start trap” style pullback, trading at $4,588 on August 27, demonstrating strength relative to Bitcoin (BTC). However, analysts warn that only a breakthrough above $4,700 and holding above that level can confirm that a new upward trend has been initiated.

Strong Rebound After the “Week-Start Trap”

(Source: CryptoQuant)

At the beginning of this week, ETH experienced a typical “Monday Trap” - a situation where leveraged long positions were subject to massive liquidation. Historical data shows that Mondays often peak in long liquidations, with April and June’s pullback periods seeing over 300,000 ETH liquidated in a single day.

Despite this, ETH surged by 5% on August 26, far exceeding BTC’s 1% increase, showing an astonishing speed of capital inflow.

Overheating in the Derivatives Market and Potential Risks

The leverage usage rate in the derivatives market is at a historical high. Binance’s Estimated Leverage Ratio (ELR) has surged from 0.09 in 2020 to 0.53, setting a new record.

Open interest: Reached $70 billion on August 22, a historical high.

Risk Warning: High leverage means that once the price reverses, it may trigger a sharp deleveraging and forced liquidation wave.

Spot capital inflow and long-term positions increase

In contrast to the high risks of the derivatives market, the spot market is showing positive signals:

1. In August, the net inflow of stablecoins into large CEXs was 1.65 billion USD, marking the second time this month that it has surpassed 1.5 billion USD.

On August 24-25, over 208,000 ETH (approximately $1 billion) were withdrawn from exchanges to cold wallets, indicating an increased willingness to hold long-term.

This kind of “high leverage + capital accumulation” convergence puts ETH at a critical moment of long and short divergence.

Technical Analysis: $4,700 is the Bull-Bear Threshold

(Source: Trading View)

On August 27, ETH rebounded to $4,579 after testing the long-term support at $4,350.

Bullish conditions: Break above the bearish fair value gap (FVG) high of 4,600 USD and close daily above 4,700 USD.

Upside target: If the breakthrough is successful, the short to medium-term structure will simultaneously turn bullish, opening up the space to challenge 5,000 USD.

Risk scenario: If it continues to be blocked below $4,700, the rebound may only be a short covering; if it breaks below $4,350, it may test $4,000.

Conclusion

The current rebound of ETH shows positive signals of capital inflow and long-term holding, but the high leverage level indicates that short-term volatility risks still exist. $4,700 will be the key price level to determine whether ETH continues to correct or starts a new round of increases. Investors need to closely monitor the breakthrough of this level and the daily closing situation, as this may be the last threshold before ETH hits historical highs again.