Ethereum breaks through the resistance we pointed out five weeks ago and continues to rise

Let me end this story appropriately. On July 21, when Ethereum was priced at $1933, just becoming the most watched currency among cryptocurrencies, this column wrote that the $2000 integer mark was waiting, and resistance levels like this were rarely broken through on the first attempt. Two days ago, at $1996, I wrote that Ethereum was only $4 short of that mark, and the interesting part began. It does. Today, the trading price of Ethereum was US$2,388.57, up 8.4% in 24 hours, which means that the resistance level has not only been broken, but has also been completely crushed.

Real-time price shows that Ethereum appears on both the popular and most-watched lists, tied with Bitcoin (US$77,580).

What broke it, and why it wasn't really about Ethereum

The honest version of this story gives Ethereum less credit than the chart shows. Two days ago, I wrote that the approach to $2000 this time was different from July because the entire market was on the rise, rather than Ethereum alone, and this broad participation made it easier to break through resistance than to lead the gains alone. It turns out that this is the whole mechanism. Bitcoin rose about 20% in three days due to expanded U.S. Treasury buybacks, the largest ETF inflow since May and a record $2.7 billion short liquidation. Ethereum did not break through its resistance through some unique developments to Ethereum, but was driven by a market-wide liquidity event, as described in the detailed analysis of this article.

This is not a criticism, but a distinction that is crucial for subsequent trends. Resistance levels broken by rising tides can only be maintained as long as the tide persists. Resistance levels breached by asset-specific demand tend to be more solid because buyers have reasons beyond momentum.

There is one Ethereum-specific data point worth noting: On August 20, spot Ethereum funds had a net inflow of US$221 million, while Bitcoin funds had a net inflow of US$606 million. This is a verifiable, non-mandatory buy and the part of the market most likely to last until the end of the week. The capital flow statement is updated daily for reference.

A telling figure

Since the Japanese column first pointed out that Ethereum led the gains at $1786 on July 14, the token has risen by about $600 per token in five weeks, or about 34%.

This number is a double-edged sword and deserves honest interpretation. It confirmed the observation that Ethereum had led the rally before anyone noticed it. At the same time, it also means that investors entering today are paying one-third more than readers who read the note, entering a market where the relative strength index is already deeply overbought, and the previous rise is mainly driven by irreproducible liquidations.

The uncomfortable arithmetic in squeeze markets applies here, and the relevant mechanism has been fully explained. Forced purchases from short liquidations are real purchases, but fuel supplies are limited. When the shorts disappear, those buying suddenly disappear rather than fade away. All that remains is voluntary demand under the new price, and $2388 was a price no one was willing to voluntarily pay a week ago.

Where the current structure is

The old resistance level becomes the new support level, and this is the rule of such events. $2000 now becomes the level that distinguishes real breakthroughs from back-and-forth fluctuations. It is about 16% below the current price, a considerable distance before which no one can claim that the structure has been broken.

The more recent question is what will hold up during this period. Between here and $2000, the $2250 to $2300 area has been where buying has been concentrated over the past two days and is the first position to be tested during a pullback. There is no area of recent intensive trading up to a fairly high level above, which is what happens when a market gaps break through a level rather than slowly grind: it leaves no reference point.

Under all levels, the underlying support of $1879 that this column has been tracking since mid-July is now history rather than a current focus. This is what a good five-week period does to the chart.

What will I focus on and what won't focus on

I won't focus on prices in the next few days. It will be noisy and will fluctuate with macro news rather than anything from Ethereum itself, and trying to interpret the meaning of a trading day in the middle of a liquidity event is how people convince themselves to make a bad entry.

I will focus on three things. 1. Whether the capital inflow of Ethereum ETF will continue to remain at the same size as on August 20, because it is a non-mandatory demand. 2. Whether the U.S. Treasury will honor its repurchase expansion plan on September 9, because macro changes are more important here than any crypto-native story. 3. When the market sees the next real decline, whether Ethereum can remain above US$2250 at the daily closing price is the only test to distinguish asset repricing from temporary hikes.

Five weeks ago, the resistance level was only $67 away from the price then, and I said it would take more than one try. The result was only used exactly once, achieved by a market that did not consider Ethereum at all. This level has passed now, but the verification has not yet been completed.