Ethereum rally continues as overbought RSI raises pullback risk
Ethereum continues to advance after breaking out of a six-week consolidation, but the intensity of the short squeeze is gradually fading. Resistance at $2,480 now becomes the key level, while an overbought RSI raises the risk of a correction.
Short liquidations in Ethereum are continuing, although their scale has fallen well below the peak levels seen on August 19–20. According to CoinGlass, ETH liquidations over the past 24 hours totaled around $315 million, with more than $246 million coming from short positions.
Additional support came from the regulatory side. On August 20, CFTC Chair Michael Selig said that the digital-asset market would receive market structure rules even if Congress failed to pass the relevant legislation.
The $2,480 resistance defines Ethereum’s next move
Ethereum has continued to move toward the $2,480 resistance discussed in the previous analysis. This level now becomes the key reference point for the coming days.
A sustained move above $2,480 could trigger another wave of short covering and accelerate the advance above $2,600. Following the sharp shift in market structure, such breakouts remain particularly sensitive to clusters of leveraged short positions.
The base case, however, is for momentum to slow around $2,480, followed by a correction toward the broad $2,200–2,000 area. After such a strong advance, some market participants may begin to lock in profits.
The RSI (14) provides another sign of overheating after moving into overbought territory. A high RSI alone, however, is not enough to signal a reversal, as the indicator can remain elevated for an extended period during a strong trend.
The market’s reaction around $2,480 will therefore be the key signal.
Short squeeze fades as the market looks for a new catalyst
Large-scale short liquidations were one of the main drivers behind the recent gains in Bitcoin and Ethereum, helping the market finally break out of its six-week consolidation. This source of additional demand, however, cannot support the rally indefinitely. As a growing share of aggressive short positions is closed, the effect of the short squeeze naturally weakens.The next question is whether a new fundamental catalyst can replace forced buying with more sustainable demand. One potential factor is further progress on the CLARITY Act, with a procedural Senate vote expected on September 15.
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