The post Ethereum’s Surge Past $2.7K Sparks Debate Over Sustainability Amid Rising Exchange Reserves and Decoupling from Bitcoin appeared on BitcoinEthereumNews.com.

Ethereum’s recent surge past $2,700 has ignited discussions about sustainability amidst rising exchange reserves and a weakening correlation with Bitcoin. Despite the initial surge, analysts are concerned that the increasing exchange reserves indicate declining momentum within the Ethereum ecosystem. As noted by CryptoQuant, the recent shift in Ethereum’s correlation with Bitcoin could disrupt traditional investment strategies. This article delves into Ethereum’s recent price actions, the implications of rising exchange reserves, and its evolving relationship with Bitcoin. Short squeeze ignites as ETH breaks $2.7K Ethereum’s ascent beyond the $2,700 resistance prompted a sharp liquidation event on exchanges like Binance, leading to the closure of over $50 million in short positions, as per CryptoQuant’s data. This event exemplifies the volatility characteristic of cryptocurrency trading. Source: CryptoQuant This liquidity cluster, marked on the Liquidation Delta chart, attracted stop-loss orders as ETH surged. However, the optimism was short-lived; over 144,000 ETH subsequently flowed into derivatives exchange reserves, signaling potential trend reversals. In the aftermath of this short squeeze, the influx of ETH into these reserves raises concerns about the sustainability of the bullish momentum. While market participants celebrated the breakout, data suggests that renewed short positioning could be on the horizon. Ethereum-Bitcoin correlation collapses Historically, Ethereum and Bitcoin have exhibited a strong correlation, frequently hovering above 0.7. However, this relationship has deteriorated, with ETH’s correlation to BTC dropping to a mere 0.05 as of late May, down from 0.63 at the beginning of the year. Source: CryptoQuant This drastic decoupling disrupts one of the crypto market’s most consistent patterns, requiring a reevaluation of established investment strategies. Notably, Ethereum has underperformed relative to Bitcoin during recent rallies, adding another layer of complexity to market dynamics. Decoupling dampens momentum Ethereum’s deviation from Bitcoin is overshadowing market confidence. Without the buoyancy typically provided by synchronizing BTC rallies,…

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Filed under: News - @ May 25, 2025 12:20 pm