Ethereum price is priced at $2500, and RSI sends a warning signal

Ethereum price broke after overbought signals, rising risk of correction

Ethereum (ETH) prices traded around $2,300 on Thursday after a breakout driven by derivatives trading pushed it above the three-month trading range. However, the emergence of overbought signals increases the risk of a correction.

Market Overview

Ethereum prices rose about 20% from below US$1,950, hitting highs near US$2,300 during the day. The daily relative strength indicator (RSI) rose above 83, entering a deeply overbought area. The $2,300 to $2,500 range remains the next major resistance level. CoinGlass data shows that there are dense clearing areas around $2,300 and below $2,200.

Today's price trend

As of press time on August 20, the price of Ethereum was approximately US$2,285, up 1.4% during the day, after briefly touching US$2,298. The rally was a continuation of Wednesday's breakout, when ETH quickly pulled up from below $1,950 and broke through multiple resistance levels within hours. At its peak, the increase was about 20%.

Prior to this round of gains, Ethereum fluctuated between $1,850 and $1,950 for most of August. Multiple attempts to break through the upper edge of the range were unsuccessful, resulting in short positions accumulating near the psychological barrier of $2,000.

A sudden increase in spot and derivative buying changed this pattern. ETH quickly broke through $2,000,$2,100 and $2,200 with little sustained resistance, forcing traders holding bearish leveraged positions to cover assets as prices rose. The initial rise left a long upper shadow line around $2,330, indicating that some holders were taking profits above $2,300. Still, buyers kept ETH above $2,250 on Thursday, avoiding a deeper pullback during the first consolidation.

What is the driving force for the rise?

The breakthrough coincided with gains in the broader cryptocurrency market after the U.S. Treasury Department announced it would increase the size of its long-term bond repurchase operations. On August 19, the U.S. Treasury Department said it would increase the maximum size of liquidity-backed repurchase of 10-to 30-year nominal treasury bonds from US$2 billion per operation to at least US$4 billion. The change will take effect on September 9 and last until November 4.

The plan is designed to support liquidity in longer-term government bonds rather than directly stimulate the cryptocurrency market. However, some market participants interpret larger purchases as a positive for financial liquidity and risky assets. As longer-term government bond yields fell, the cryptocurrency market rose. Ethereum hit its highest price since May, and Bitcoin topped $70,000 driven by the same risk appetite.

Derivatives positions then added upward momentum. It is worth noting that Ethereum saw US$2.55 billion in active market buying volume within an hour, while a wave of short liquidations forced the market to buy further amid the rapid rise. About $49 million in positions held by a high-ranking trader were reportedly liquidated. Forced liquidations may accelerate gains because exchanges automatically buy underlying assets or close out put contracts when collateral falls below required levels.

The U.S. spot Ethereum ETF also recorded a daily net inflow of US$189.1 million on August 19. The positive flow of ETF funds suggests that while the derivatives market is rising rapidly, demand is also emerging through regulated U.S. products. Political progress has added impetus to the overall improvement in cryptocurrency sentiment. Former President Trump called on Congress to advance legislation on federal digital asset market structure after a White House event on August 19, which was attended by several cryptocurrency company executives. The U.S. Securities and Exchange Commission has also proposed a framework to cover certain registered crypto asset offerings. These two developments may affect long-term regulatory prospects, but neither constitute a final change in federal law.

US$2,300 to US$2,500 range faces resistance

Ethereum's daily chart shows that it has clearly broken through the Ichimoku equilibrium cloud chart and major trend lines. ETH is trading about 9% above the conversion line (US$2,098) and about 10% above the benchmark line (around US$2,078), reflecting the speed of this volatility. The upper boundary of the cloud map is about US$2,088, making the US$2,075 to US$2,100 range an important support area that will come into play if ETH retracts some of the gains. Even if prices fall back from $2,300, holding the region will preserve the overall breakout pattern. Recent support in the shorter cycle is between $2,220 and $2,250, with buyers repeatedly entering the area after an initial surge. A break below this zone could expose $2,100, followed by the upper limit of the previous range of about $1,950 to $2,000.

However, the kinetic energy has been overextended. The daily relative strength indicator reached 83.25, well above the traditional overbought threshold of 70 and its moving average of about 57. The overbought RSI does not guarantee an immediate decline, especially during a strong breakout period. But it does suggest that ETH is rising much faster than the recent average and may need to consolidate before the next sustained volatility occurs. The 4-hour Bollinger Band also reflects a similar situation. Ethereum is trading around $2,288, slightly above the upper track of about $2,283, while the middle track is still around $1,998. The wide range between price and the mid-rail shows that ETH has moved away from the recent average.

A daily close above $2,300 opens a path to $2,400 or even $2,500. The $2,500 level is of additional importance because it is close to the early supply area visible on the long-term moving average and weekly charts.

Liquidation chart shows increased volatility risk around $2,300

The three-day CoinGlass liquidation heat chart shows that ETH is approaching a series of leveraged positions between $2,300 and $2,350. Entering the area could trigger further short liquidations, fueling another wave of brief stretches. Liquidity is also accumulating below the market. Visible clusters are located near $2,220,$2,180 and $2,100, while the largest concentration area remains around $1,900. Liquidation levels are not guaranteed price targets. They simply point out areas where leveraged positions may be forced to be closed and may attract prices during periods of high volatility. Since most of the liquidity below $2,000 was accumulated before the breakout, a full return to the area would require ETH to lose multiple newly recovered support levels. The more immediate risk is a backtest of $2,220 or $2,100 as traders reduce leverage and take profits.

Analysts see US$2,500 as the next test

Cryptocurrency analyst Michaël van de Poppe said that Ethereum's move confirms that the market is in a bullish phase, but he does not expect assets to continue to rise in a straight line. Van de Poppe said ETH has reached approximately 0.033 BTC against Bitcoin and described a pullback from this level as a potential buying opportunity.

Market commentator Ted Pillows identified $2,500 as the next resistance level for Ethereum. He believes that recovering that level will reduce the likelihood of ETH returning to new cycle lows, while blocking will keep the lower end of the range relevant. These two views are consistent with the visible price structure: Ethereum has shifted from consolidation to upward trend, but assets are approaching resistance with abnormally extended momentum. For U.S. investors, Treasury yields, U.S. dollars and spot ETF funding flows may determine whether this breakthrough develops into sustained demand. A pause near $2,300 will cool technical indicators, while a high volume close above $2,500 will provide stronger confirmation that buyers can absorb profit-taking after a short squeeze.