Ethereum Faces $2,500 Resistance Amid Long-Term Bullish Signals and Short-Term Warnings
Ethereum continues to rally following the Pectra upgrade, but technical indicators suggest the market may need a correction before breaking the psychologically strong $2,500 resistance.
Ethereum (ETH) is trading around the $2,500 mark as market sentiment turns more positive thanks to the recent Pectra upgrade and signs of on-chain improvement. However, some short-term technical indicators suggest the market may be overheating, opening the door to a correction before Ethereum resumes its long-term recovery.
Realized Market Cap Up $3.8 Billion: Money Flows Back
According to on-chain data from Glassnode, Ethereum’s realized market cap – a measure that reflects the actual value paid by investors – increased from $240.8 billion to $244.6 billion between May 7 and 19, a 1.6% increase.
This is the first time the metric has increased after three consecutive months of decline since early February, indicating that investor confidence is recovering, especially from long-term investors. With money flowing back into ETH at current prices, this could be a stepping stone for a more stable growth period in the coming period.
ETH Struggles at Psychological Resistance of $2,500
While fundamentals are strengthening the upside momentum, short-term indicators are sounding the alarm.
According to a report from CryptoQuant, Ethereum is approaching an “overheated” zone – characterized by a surge in trading volume and increased profit-taking pressure. The $2,500 level is not only a technical barrier but also a psychological one, considered a “resting supply zone” – where many investors tend to sell to take profits.
CryptoQuant noted: “A short-term correction may occur to cool the market, before forming a new accumulation base.”
In previous cycles, spikes in volume have often been accompanied by a correction phase when the price approaches a strong resistance zone.
Data Shows Risk of Ethereum “Supply Shock”
Aside from the short-term warnings, analysts are still watching a trend that could support ETH prices in the medium term: decreasing supply on exchanges.
Data from Santiment shows that the proportion of ETH held on exchanges has dropped to a record low, while the proportion of BTC held on exchanges is at its lowest since 2018. This reflects a trend of moving assets to cold wallets – a sign that investors are holding for the long term.
If exchange liquidity continues to decline while demand increases, Ethereum could face a classic supply shock – a factor that has driven strong price increases in previous cycles.
Why This Matters
Ethereum is at a critical juncture: fundamental signals point to long-term growth potential, while technical factors warn of a possible short-term correction. How the market reacts to $2,500 will be pivotal in determining ETH’s next move – whether it will be a consolidation correction or a decisive breakout to higher prices.
Conclusion: Ethereum is attracting new money and has solid fundamentals to grow, but the current rally may have to "take a break" before continuing its journey to conquer new heights.