Ethereum market overheats near $2.5K — is a short-term correction on the horizon?
Ethereum has climbed to around $2,540, approaching the key $2,500 level, but signs point to the market becoming overheated.
According to a May 21 analysis by CryptoQuant contributor ShayanMarkets, trading volume has spiked as Ethereum ( ETH ) nears this resistance zone. This increase in activity has coincided with a spike in short-term profit-taking. When a market is said to be “overheating,” it typically means that prices have risen too quickly due to speculation rather than long-term conviction.
In this instance, ETH’s quick 55% recovery over the last month after a 45% decline in Q1 raises the possibility that the rally may be about to pause or reverse. The overheated market suggests a potential short-term pullback, creating room for fresh accumulation once conditions stabilize.
Technical data supports this view. The relative strength index, at 69, is hovering just below the overbought zone, a level that often precedes short-term corrections. Meanwhile, momentum is still positive and all of the major moving averages, from the 10-day to the 200-day, are pointing upward. This suggests that there is still strong underlying support even when the current price action has stalled.
If Ethereum is unable to break $2,700, it may retreat to the $2,300–$2,350 range, where support is starting to form. If there is a more significant correction, prices may approach $2,100. However, the rally may continue if ETH makes a strong breakout above $2,700 on high volume, particularly if there are positive developments to back up the breakout.
Behind the scenes, large players appear to be positioning for what could come next. On-chain data shows that since late April, large holders, wallets with more than 10,000 ETH, have accumulated more than 450,000 ETH. Meanwhile, U.S.-based Ethereum exchange-traded funds have seen $108 million in net inflows over the past month, according to SoSoValue data .
Now, a significant catalyst is approaching. By June 1st, the U.S. Securities and Exchange Commission is expected to make a decision regarding the inclusion of staking in ETH ETFs. By allowing institutions to earn yield from these regulated products, it could stir a new wave of demand.
Along with the demand for ETFs, London-based asset manager Abraxas Capital purchased 350,703 ETH, worth about $837 million, between May 7 and May 20. With favorable on-chain trends and increasing institutional appetite, Ethereum’s long-term narrative seems intact despite short-term pressures.

Defi App launches its governance token HOME, unlocking exchange-level utility through DAO
DeFi App, a decentralized finance (DeFi) platform, announced that it will launch the HOME token, which aims to solve the complexity problems in the crypto space and build a user-owned, community-governed "crypto super app". Defi App was launched three months ago and has achieved more than $10 billion in spot and perpetual contract processing volume, and ranked among the top five DEX trading volumes within a few days of going online, with more than 300,000 active users. The core function of the HOME token is to govern the development of Defi App and the utility of the token itself, enabling the community to propose and vote on platform development, including treasury strategies (such as buybacks, fee sharing), transaction fee mechanisms, integration priorities, and future token utility (such as staking and reward systems). Defi App emphasized that the HOME token is different from traditional governance or utility tokens. It is designed to empower the community, achieve product priority, community governance, and unlock exchange-level utility in the form of DAO. In the distribution plan of HOME tokens, 45% is directly allocated to the community and ecosystem, 10% is reserved for private investors, and the rest is allocated to core contributors, foundation partners, grants, strategic advisors, and protocol treasuries. Defi App also previewed the future launch of iOS and Android mobile applications, a one-click deposit function (HOME Finance), advanced staking, and protocol bribery.