Ethereum is the decisive moment a week after a turbulent trade. After pushing prices to new highs following a strong surge on Friday, ETH quickly faced sales pressure and fell sharply by Monday. Currently, the assets are trying to stabilize above the $4,400 level. This is an important zone the Bulls have to defend to prevent further negative side momentum.
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Recent volatility highlights how vulnerable emotions can be at major turning points. The bull is optimistic that ETH can maintain momentum and gain momentum towards the much-anticipated $5,000 mark, but the Bears argue that the market structure could potentially continue with more downsides if support fails.
In addition to this uncertainty, analyst DarkFost has issued warnings about the risk of rising derivatives markets. His analysis shows that ETH’s Binance Estimated Leverage Ratio (ELR) reaches the highest ever recorded level, indicating extreme risk conditions. The ELR measures how heavy the leveraged position is compared to overall open interest.
For leveraged sky rockets, the market often experiences an increase in volatility. Traders who take excessive risk can cause forced liquidation and amplify price fluctuations in both directions. As ETH sits at a vulnerable level of support, the combination of leverage accumulation and recent price movements will make the coming days important for Ethereum’s short-term trajectory.
Ethereum increases risk with vinance
According to DarkFost, the estimated leverage ratio (ELR) is one of the most reliable indicators for measuring whether the market is in dangerously excessive leverage. The ELR combines open interest data with overall market activity to highlight the extent to which traders rely on the funds they borrow to amplify their position.
Recent data shows that open interest in Binance reached a new history of $12.6 billion on August 22, reflecting record-breaking speculative activity. In the context, in July 2020, Binance’s ELR was only 0.09, a relatively safe level. Today, that number has skyrocketed to 0.53, marking the highest reading ever recorded. Such a rapid increase suggests that traders are in positions with unprecedented leverage.
DarkFost explains that if leverage rises to these extremes, the outlook for the short-term market is dangerous. Excessive optimism often makes participants vulnerable to forced liquidation. Once liquidation is cascaded, they can widen price fluctuations far beyond what happens in spot-driven movements.
Despite the facilities and massive accumulation of whales at Ethereum, Binance remains the largest hub of trading activities. When derivative volumes exceed spot activity, leveraged positioning has the power to determine short-term price movements.
Given the high risk of delarging events, just as Ethereum is broken beyond its all-time high, such events can temporarily drive leveraged positions before the market regains its balance. However, many analysts believe this will act as a reset, and eventually Ethereum will retest, paving the way for potentially above the $5,000 level.
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Hold important support amid sales pressure
Ethereum is currently showing signs of vulnerability after a strong rally last week. On this 4-hour chart, ETH trades around $4,426, and is around $4,451 near the key support zone defined by the 50-day moving average (blue line). Price action shows a sharp refusal from a high above $4,800, followed by a sudden retracement that challenges short-term momentum.
The $4,400 region has emerged as an immediate level of support that ETH is trying to stabilize. A sustained hold over this area could allow the Bulls to reorganize another push towards the $4,800-5,000 resistance zone, leaving them the next psychological target. Conversely, if the $4,400 level fails, the ETH could slide towards about $4,350 towards the 100-day moving average (green line).
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While this structure still supports bulls with a broader trend, recent revisions highlight the market’s sensitivity to exploitation and short-term volatility. For traders, the $4,400 level is important. Holding it above will keep bullish continuity alive, but breakdowns can cause deeper benefits. Overall, ETH is on the upward trend, but volatility at these levels should be wary.
Dall-E special images, TradingView chart
