The long ETH contract has just hit a record high, expected to correct to the zone of $ 140-180 in Q2

The ETH price has a quick pullback that makes technical analysts target below $ 200 in the short term. Despite being one of the top performing cryptocurrencies in the past two months, it is rapidly losing momentum.

Mainly because long ETH reached a record high

On Bitfinex, long ETHUSD reached a record high of 659,247, surpassing the previous high of 579,785.

The large number of long ETH contracts has made the interest rate of Ethereum permanent contracts soar.

Long ETH dat folder 2

The long ETH contract reached a record high. Source: Tradingview

On BitMEX, the interest rate for ETH permanent swap contracts remains at 0.098%. That means, if a trader opened a long contract of $ 100,000, the trader would pay $ 98 for each funding session.

Because the funding occurs every 8 hours, traders will pay nearly $ 300 / day just to open a long contract.

The problem occurs when prices start to decline while long contracts reach new highs and interest rates remain extremely high.

If the price of Ethereum starts to decline and traders still pay high interest rates to maintain long, that forces long-term contract owners to adjust their positions.

When long contracts are market closed, they turn into a market sell order, which then translates into selling pressure.

The ETH price has dropped 20% from $ 280 to $ 220 within two weeks and technical analysts expect Ethereum price to drop to support level of $ 180 in the near future.

Continuing the downtrend in the context of high interest rates and the increase in long contracts can lead to liquidation of a series of long orders or closed market orders.

Considering that short-term price movements in the cryptocurrency market are primarily affected by margin trading platforms such as BitMEX and Bitfinex, analysts are concerned that Ethereum will perform worse than Bitcoin when the market school back.

Analyst Luke Martin said:

"When we enter March, I am expecting the inefficiency of ETH. Altcoins have been doing well since the start of 2020 but it all reversed with lower momentum. Bet on a lower price for ETH ".

How deep will the price adjust?

The ETH price has increased by 120% since the beginning of the year so far, in less than two months, which could be a reaction to over-selling conditions in 2019.

Long ETH dat folder high 3

ETH / USD YTD chart. Source: TradingView

For years, the cryptocurrency market has witnessed protests occurring for a short period of time and a pullback shortly thereafter due to a lack of demand and support levels to sustain the uptrend.

Technical analysts predict the range of $ 140 to $ 180 as a potential support area for ETH entering the second quarter of 2020.

You can see the price of ETH here.

Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Annie

Bitcoin Magazine

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My name is Nguyen Manh Cuong. I was born in a poor village in Ba Vi district, HA NOI province - windy and sunny land

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