Why is Ethereum (ETH) price up today?

 Due to decreasing concerns over FTX liquidation, the price of Ethereum is up today, fully recovering from yesterday's selloff.

Ether ETH, the native token of Ethereum counts down $1,605, which had dropped the day before to its lowest point in six months, rebounded more than 4.5% to reach $1,622 on September 12.

Daily price chart for ETH/USD. the TradingView website

On September 12, when concerns about a potential FTX liquidation subsided, the price of Ethereum recovered. 

Potential FTX dumps can be absorbed by the Ethereum market. 

On September 11, new FTX court documents revealed that it has cryptocurrencies valued at $3.4 billion, including $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), and $192 million in Ether. The defunct cryptocurrency exchange has asked a New York court to order the sale of its crypto assets to pay back creditors.

Screenshot of FTX Digital Asset A Holdings. Origin: FTX

On September 12, the court will reply to the motion because some people think that approving the sale of crypto assets worth $3.4 billion would cause a market crash. 

Messari analysts contend that FTX won't have a detrimental effect on the cryptocurrency market, pointing out that the majority of their holdings are illiquid and locked assets. For instance, the market can absorb the $9.2 million worth of SOL that is unlocked each month.

Additionally, as Messari noted, FTX's $353 million in Bitcoin represents about 1% of the weekly trading volume of the cryptocurrency. As a result, the market will probably absorb much of the selling pressure for Bitcoin and Ether.

digital assets held by FTX and weekly trading volume. Origin: Messari

That may help to explain why, as of Sep. 12, the price of ether has fully recovered from the losses it sustained the day prior.

Longs are defeated by short liquidations.

On September 12, advances in the price of Ethereum matched a rise in short liquidations across derivatives related to ether.

Graph of all ETH liquidations. from CoinGlass

On September 12, Ether had $1.66 million in long holdings and $8.37 million in short positions that were liquidated. In order to close out their positions, short sellers must purchase the underlying asset. As a result, the price of ETH has increased due to a combination of new purchasers and short liquidations. 

inflated bounce

On September 11, Ether's daily relative strength index (RSI), which conventional experts consider to be in the "oversold" range, fell below 30.

Daily price chart for ETH/USD. the TradingView website

Additionally, ETH's price comeback started from a crucial level of support at $1,545. 

Technical analysis of Ethereum for September 2023

The most recent rally in Ethereum's price has pushed it closer to a potential breakout challenge of the upper trendline of its falling wedge.

Following a "textbook short squeeze," a trader claims that the price of bitcoin must reach $26,000.

Falling Bearish reversal patterns known as wedges are characterized by price consolidation between two falling, convergent trendlines. They usually end when the price crosses the top trendline and increases by the height of the wedge. 

Due to this technical configuration, Ether might reach $1,740 in September, an increase of more than 8% from current price levels, if it successfully closes above the upper trendline. Additionally, the level is in line with ETH's 50-day exponential moving average, which is represented by the red wave in the chart below.

ETH/USD daily price chart. Source: On TradingView

In contrast, a pullback from the top trendline of the falling wedge runs the risk of pushing the price of ETH down toward the bottom trendline, which is approximately $1,500, for a potential 8% reduction in September.