Ethereum Traders Raise Leverage 10-days from Bitcoin Halving -Will ETH Price Hit $4k?

Ethereum price opened trading at $3,694 on April 9, 2024, after a 7% rally in the last 24-hours sent ETH soaring above $3,720 for the first time since mid-March. Recent trends observed in the derivatives markets suggests more upside could follow.

Will rising volume of bullish bets send ETH price above the milestone $4,000 price level ahead of the Bitcoin halving?

ETH leverage trading surges ahead of Bitcoin Halving

The next Bitcoin halving is scheduled for April 19, 2024, and recent trends observed in ETH derivatives markets suggests traders are pining for a major ETH price breakout

Ethereum price has failed to reclaim the $4,000 territory since the widespread  sell-off that greeted the Dencun Upgrade in mid-March. But with the Bitcoin halving now less than 10-days away, a crucial market data point shows Ethereum traders are taking on unusual level of leverage.

CryptoQuant leverage ratio chart tracks measures the value of active derivatives contracts (Open Interest) against the cumulative number of coins currently deposited in exchange-hosted wallets (aggregate Exchange reserves).

An increase in leverage ratio means that open interest in rising faster than exchange deposits, meaning that investors are trading more aggressively, taking out more leverage on their existing spot positions, and vice versa.

The chart above shows that while ETH price rose 7% on April 8, Ethereum leverage ratio also surged to 0.29%, the highest in 45 trading days, dating back to Feb 25. as of April 9.

Typically, an increase in leverage ratio during a price uptrend suggests that market participants are increasingly using borrowed funds to amplify their trading positions.

This behavior often reflects growing investor confidence in the asset’s upward trajectory, as traders seek to maximize their potential profits by applying more leverage.

Also, considering that the Bitcoin halving slated for April 19/20 is now 10-days away, EHT traders are likely deploying leverage to capitalize on the anticipated upside from the landmark network event.

The leverage ratio is a predictive metric that has proven to historically help strategic traders time periods of price breakouts and potential reversals.  The chart above illustrates how the derivative traders began cutting down on their leverage positions in the weeks leading up to the Dencun upgrade sell-off.

Taking a cue from the March 2024 trends, the Ethereum leverage ratio rising to a 45-day peak on April 8, could be a tell-tale signal of an imminent price rally ahead of Bitcoin halving.

Ethereum Price Forecast: $3,750 Resistance at Risk

Drawing insights from the unusual surge in ETH leverage ratio, Ethereum price looks well-positioned for a rally above $4,000 ahead of the Bitcoin Halving event on April 19.

However, the ETH bulls face stiff resistance at the $3,750 range. IntoTheBlock’s In/out of the money chart which groups all existing Etheruem investors according to they entry prices also affirms this stance.

It shows that 1.08 million addresses had acquired 431,840 ETH at the average price of $3,735. If they book profits early, Ethereum price could struggle to break above $3,750.

If the bulls can establish a steady support base above the $3,750 area, the decisive breakout towards $4,000 could be on the cards as predicted.

But in the event of a market downturn, the $3,500 psychological support level will be one to watch in the near-term. Failure to hold that support territory, could see the bears regain control of the market momentum.