Ethereum, will the 2023 nightmare repeat…or is it a signal for a big rebound?

▲ Ethereum (ETH)/ChatGPT generated image ©

An analysis suggests that as Ethereum (ETH) market sentiment has frozen to 2023 bear market levels, the possibility of a large-scale rebound is increasing. In particular, aggressive selling in the Binance futures market has surged to a two-year high, indicating that the market has entered an extreme fear zone.

According to crypto media outlet Bitcoinist on May 21 (local time), on-chain analyst Darkfost analyzed that the Binance Ethereum Taker Buy Sell Ratio has currently fallen to 0.91. This is the lowest level since September 2023, and at that time, ETH also showed a strong rebound after extreme bearish market sentiment, the outlet explained.

When the Taker Buy Sell Ratio drops below 1, it means that aggressive sell orders outweigh aggressive buy orders. Darkfost diagnosed the current market situation as "not just a simple bearish trend, but a period where almost all participants are betting on a decline." He explained, "If short positions accumulate excessively in a market that is consolidating within a range, the possibility of a short squeeze (buying pressure that occurs to liquidate or cover short positions) actually increases."

Currently, Ethereum is trading around $2,130, having fallen by approximately 9% over the past 7 days. The outlet analyzed that ETH remains within its long-term range of $1,500-$4,000. However, it explained that the overall bearish structure is being maintained as recent attempts to break the $2,400 resistance failed, pushing it back below the 100-day moving average, and it also failed to overcome the resistance around the 200-day moving average of $2,600.

Technically, the $2,100-$2,150 range was identified as a key support level. If this range breaks, there is a possibility of ETH falling further to the demand zone of $1,900-$2,000. Conversely, the outlet reported that if the price rebounds in the current situation with excessive short positions accumulated, forced liquidations could occur in a chain reaction, accelerating the upward momentum.

Darkfost also noted that current trading volume is relatively low compared to the beginning of the year. He analyzed that this decline is driven more by deteriorating sentiment and defensive positioning rather than panic selling. The outlet stated, "Although spot demand has not yet strongly flowed in, market sentiment itself has entered an historically rare extreme zone."

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