Recently, there has been market activity every Sunday night, and last night was no exception, driven by ETH, whose price jumped from $3,500 to over $3,800 in one weekend, while other altcoins also saw good increases. Bitcoin, on the other hand, has remained around $118,000, and the Bitcoin dominance index BTC.D continues to decline, nearing 61%, indicating that funds have shifted from previously favoring Bitcoin to gradually entering the altcoin market.

The main reason investors are optimistic about ETH is that there was a lot of positive news for Ethereum last week, including SharpLink Gaming (SBET) significantly increasing its financing from $1 billion to $6 billion to buy Ethereum as a reserve. Additionally, last week, the inflow of Ethereum spot ETFs reached a record high, with $726 million flowing in on Thursday. It was also reported that BlackRock has submitted a revision document to the SEC to add staking features to its Ethereum spot ETF. Multiple positive news items have become fuel for the surge in Ethereum's price.

Glassnode's on-chain data reveals that since early July, more than 317,000 ETH (worth $1.18 billion) has been withdrawn from trading platforms. This large-scale withdrawal has directly caused a tightening of exchange supply, forming a classic bullish structure of 'demand exceeding supply.' When investors transfer tokens to cold wallets for long-term holding, it often indicates strong confidence in the long-term value of the asset.

The $4000 Battle

The battle of bulls and bears at this key psychological level has reached a fever pitch.

Technical charts show that Ethereum's daily level has formed a 'golden cross'—the 50-day moving average has crossed above the 200-day moving average, which is a classic signal for establishing a mid-term upward trend. The relative strength index (RSI) continues to climb, and the average directional index (ADX) has soared to 38, reaching its peak since May 17, indicating that current rebound momentum is still strengthening.

But the market saturation signal has turned yellow.

The network value to transactions (NUPL) ratio of Ethereum is approaching the 'belief-denial' zone. Historical data shows that when NUPL enters this zone, Ethereum's price often undergoes a short-term correction. This indicator essentially serves as a 'overheating detector' for market sentiment; when the proportion of profitable investors is too high, it is likely to trigger a wave of profit-taking.

The current rebound momentum is strong, but caution is needed as it approaches the $4000 threshold, as selling pressure may arise.

Key price levels for the bull and bear battle

Breakout scenario: If it successfully stands above $4000, it will trigger a short squeeze, pushing the price towards the Fibonacci expansion point of $4400.

Pullback risk scenario: If resistance is met at the $4000 level, it may fall back to the support level of $3,530; if this position is lost, it could drop to $3,131, erasing recent gains.

The derivatives market is currently showing signs of overheating risk. As of July 21, the total open positions of Ethereum futures contracts exceeded $56 billion, setting a new historical high. When leverage accumulates and resonates with high prices, any minor disturbance could trigger a cascade of liquidations. Technical indicators show that Ethereum's daily RSI reached the overbought area of 75, the MACD is in a golden cross but the red bars are shortening, indicating a diminishing short-term upward momentum.

Currently, on Monday, it is important to observe the impact of the Liberal Democratic Party's defeat in the Japanese Senate elections on the yen and Japanese stock market. If the yen falls sharply, it may increase the pressure on the Bank of Japan to raise interest rates, which could drag down global stock markets like last year, while also affecting the cryptocurrency market. However, the current cryptocurrency market is optimistic due to the favorable news for ETH and the passage of three cryptocurrency bills by the U.S. House of Representatives last week, but attention should still be paid to the performance at the opening of the U.S. stock market on Monday.

For those holding spot, remember to reduce positions if profits are good. Those without positions should pay attention to Ethereum and public chain tokens, especially the domestic public chains QTUM and NEO.