The Current Market Sentiment's Impact on Ethereum's Trend
1. Greed Sentiment Remains High
As of today (July 26), the cryptocurrency Fear and Greed Index is at 71, remaining in the 'Greed' range for several consecutive days. This sentiment can often lead to two opposing effects:
• Support for High-Level Consolidation: Bulls still have enough momentum, buying the dips in the $3,600 to $3,650 range to prevent a significant price drop;
• Accumulation of Correction Risks: Extreme greed is often a breeding ground for short-term tops. Once buying pressure cannot keep up, profit-taking will surge, amplifying volatility.
2. FOMO and Short Squeeze Expectations Coexist
In the past week, ETH has rapidly surged close to $4,000, with calls on social media and communities to 'hit new all-time highs' rising, spreading FOMO sentiment. This is validated on the liquidation map:
• Below $3,600, $3,500, and $3,400, a large amount of short liquidations has accumulated. If the price stops declining and rebounds, it will trigger 'short squeeze' buying;
• Above $3,700 to $4,000, there is a dense accumulation of long liquidations. If the upward move fails, long liquidation will exacerbate the correction.
Therefore, the greed sentiment provides potential fuel while also laying the groundwork for intense fluctuations.
3. Divergence in Capital: Retail Investors Hesitant, Whales Diverging
• The active long-short ratio on exchanges shows that short positions slightly dominate across most platforms, with short-term funds tending to be cautious;
• On-chain data indicates that whale addresses saw net inflows from July 24 to 26, suggesting that some large holders view the correction as an opportunity to increase positions and remain optimistic in the medium to long term.
This misalignment of 'retail hesitation and large holders buying the dip' often results in price first consolidating before choosing a direction.
4. Macro and Ecological Expectations Continue to Provide Support
Expectations for Federal Reserve rate cuts, rising demand for RWA (Real World Assets) and stablecoins, combined with the recovery of daily active users in the Layer 2 ecosystem, provide a medium-term bullish narrative for ETH. Before the greed sentiment completely retracts, these fundamental factors limit the space for a deep correction.
Conclusion
The greed sentiment makes it difficult for ETH to 'drop deeply or rise easily' at high levels, and it is highly likely to maintain a volatile range of $3,500 to $3,800 in the short term; if the sentiment indicator moves into 'Extreme Greed' (>75), caution should be taken against a rapid surge followed by a drop. Conversely, if the greed index falls below 50, combined with triggering liquidation zones, ETH may leverage this to complete a healthy pullback before attempting to rise again.
