Ethereum Bounces Above $1,600: Brief Spike or Real Reversal?

Ethereum (ETH) bounced back on Monday, gaining +1.30% over 24 hours to reach $1,661, outperforming a near-flat Bitcoin market. The move comes despite persistent weakness across traditional risk assets, with traders largely attributing the rally to a short squeeze that triggered a wave of liquidations. The central question remains unanswered: is this a simple bullish retracement or the beginning of a genuine structural rally?

ETH at $1,661: Technical Structure Under the Microscope

Ethereum’s return above the $1,600 threshold is technically significant. This level represents a major psychological support zone that has been tested multiple times during the recent weeks of correction. As long as price holds above it, the market structure remains defensible for buyers.

On the indicators side, the RSI on the daily chart is recovering from oversold territory, signaling a gradual return of buying pressure. The MACD, meanwhile, is showing an early convergence between its lines, though it has yet to confirm a clear bullish crossover. These signals remain fragile and require confirmation across several consecutive closes.

The next key resistance sits around $1,750, a zone where sellers have historically regained control during recent bounces. A breakout above this level would open the door toward the $1,900 area, a former support that has acted as resistance since the start of the 2025 bear market.

Short Squeeze or Structural Reversal: Two Scenarios

Bullish scenario: if Monday’s short squeeze extends and attracts spot buyers, ETH could consolidate above $1,650 before mounting an assault on the $1,750 resistance. Rising volume accompanying the move would reinforce the case for a genuine rally, potentially fueled by renewed institutional interest in Ethereum and Ethereum ETFs.

Bearish scenario: conversely, if the bounce fades quickly below $1,700 and volume dries up, the move will look more like a technical retracement within a broader downtrend. In that case, a return toward the $1,550 support level — or even $1,480 — remains plausible. Weakness across traditional assets represents a meaningful macro risk for this scenario.

Analysts remain divided, though several point out that Ethereum retains solid fundamentals: on-chain activity, continued development of the Layer 2 ecosystem, and growing DeFi adoption. These factors differentiate ETH from a purely speculative asset and support the view that the long-term bullish thesis remains intact despite the recent correction.

Next Target: $1,750 or a Drop Back to $1,500?

The short-term verdict will depend on ETH‘s ability to consolidate above $1,650 over the next 48 hours. Holding above that level, combined with the MACD flipping into positive territory, would represent a credible entry signal for momentum traders. The $1,750 zone then becomes the first realistic target before any hope of a bull run toward $2,000.

On the other hand, a daily close below $1,600 would invalidate the short-term bullish scenario and reopen the door to a test of lower support levels. The RSI must hold above 40 to avoid triggering a fresh bearish signal on the daily chart. Traders will also be watching Ethereum ETF flows closely as a gauge of institutional sentiment.

Ethereum is far from dead — but it still needs to prove that this bounce is more than a mechanical byproduct of the short squeeze. The next few sessions will be decisive.