Ethereum ETH rallied more than 5% over the last 24 hours, climbing above $1,850 after weaker-than-expected US inflation data fueled optimism across financial markets.
The broader cryptocurrency market also advanced as investors welcomed signs of easing inflation, increasing expectations that the Federal Reserve could adopt a less restrictive monetary policy in the coming months.
The latest US Consumer Price Index (CPI) report showed annual inflation slowed to 3.5%, below economists’ expectations of 3.8%.
Monthly inflation also declined by 0.4%, marking the sharpest monthly drop since May 2020.
Meanwhile, core CPI, which excludes food and energy prices, eased to 2.6%, beating forecasts of 2.8%.
Following the report, market expectations for a Federal Reserve interest rate hike at its July 29 meeting dropped to just 8%, helping fuel gains across cryptocurrencies and traditional risk assets.
Ethereum’s sharp rebound caught bearish traders off guard. According to derivatives market data, approximately $116 million worth of short ETH positions were liquidated over the past 24 hours as prices surged higher.
The broader crypto market gained roughly 2.4%, supported by improving investor sentiment following the inflation release.
The rally also extended Ethereum’s gradual recovery that began earlier this month as macroeconomic conditions improved.
Although Ethereum has recovered strongly, on-chain data suggests both retail investors and large holders remain cautious.
Wallets holding between 100 and 1,000 ETH, as well as those with 1,000 to 10,000 ETH, reduced their combined balances by approximately 30,000 ETH over the past week.
Meanwhile, larger whale wallets holding between 10,000 and 100,000 ETH sold roughly 20,000 ETH during the same period.
The continued reduction in holdings indicates that many investors are still taking profits or remaining defensive despite the recent price rebound.
Open interest—the total value of outstanding futures contracts—rose by approximately 9% to $26.69 billion, its highest level in more than a month.
The increase suggests leveraged traders are returning to the market with a bullish outlook.
Funding rates also remained positive, indicating that long-position traders continue to dominate derivatives activity as Ethereum extends its recovery.
The ETH/USD 4-hour chart is bullish and efficient, but Ethereum maintains a constructive short-term outlook.
The cryptocurrency is trading above both its 20-day EMA at $1,755 and 50-day EMA at $1,802.
However, ETH remains below the 100-day EMA at $1,948, which continues to act as a key resistance level.
Momentum indicators remain supportive of additional gains.
The Relative Strength Index (RSI) stands at 67, signaling solid bullish momentum, while the Stochastic Oscillator is hovering near 96, indicating overbought conditions that could slow the pace of the rally.
If buyers maintain control, Ethereum could target $1,909, which serves as the immediate horizontal resistance.
A daily candle close above this level could expose higher resistance zones at $2,018, $2,107, and $2,211 in the near term.
On the downside, Ethereum’s immediate support levels lie at the 50-day EMA of $1,802.
A decisive break below this level could see ETH retest the 20-day EMA at $1,755 and the horizontal support at $1,741
These levels have recently acted as a strong support zone, helping Ethereum rebound during its latest recovery.
If selling pressure intensifies, deeper corrections could expose support around $1,524 and $1,404.
Ethereum has regained bullish momentum following softer-than-expected US inflation data, with improving derivatives activity supporting the recent rally.
However, continued whale selling and weakening US spot demand suggest investors remain cautious.
