Ethereum Flashes Major Bearish Signal as Price Drops Below $4,000
Ethereum (ETH) is going through a tough time right now since it is trading below the $4,000 level, which is significant for the mind. At the
Quick overview
- Ethereum is currently trading below the critical $4,000 level, having dropped more than 2% in the last 24 hours.
- Technical indicators suggest a negative outlook, with ETH struggling to maintain support levels and showing bearish momentum.
- Retail traders are overly optimistic, holding 90% of their long positions, which could signal a potential market reversal.
- Institutional buying activity contrasts with retail sentiment, as significant purchases of ETH could support price recovery if key resistance levels are breached.
Ethereum ETH/USD is going through a tough time right now since it is trading below the $4,000 level, which is significant for the mind. At the time of writing, ETH was still above $3,900, but it had dropped more than 2% in the preceding 24 hours. Bears are getting stronger in the market after a failed attempt to build momentum above $4,120.
ETH/USD Technical Analysis Points to Extended Consolidation or Further Decline
The short-term technical prognosis for Ethereum looks more and more negative. ETH has dropped below important support levels at $4,020 and $4,000 after having trouble staying above $4,120. The price is now below the 100-hourly Simple Moving Average. The price dropped to $3,828 on a recent test of the $3,820 zone before slowly rising again.
There is now a negative trend line on the hourly chart, with resistance at $4,070. Ethereum needs to break over immediate resistance around $3,950, then larger hurdles at $4,020 and the important $4,070 mark in order for bulls to become back in charge. A strong break above $4,070 might go to $4,120 and maybe even $4,220–$4,250 in the near future.
But if it doesn’t go back to $4,020, it might go down again. The first level of support is $3,880, while the second level is $3,820. If this level is broken, losses are likely to speed up into $3,740, $3,650, and maybe even $3,550. The hourly MACD is getting stronger in a bearish area, and the RSI has dipped below the neutral 50 mark, which means that negative momentum is confirmed.
The weekly MACD indicator for Ethereum has shown a bearish cross, which is an indication that has come before huge drops in the past. In the past, this pattern happened in mid-2024 and the first quarter of 2025, when it caused losses of 46% and 60%, respectively. Analysts say that if history repeats itself, ETH could face a lot of downward pressure in the next several weeks.
Retail Euphoria Presents Contrarian Warning Signal
Even though technical indicators say to be careful, retail traders are showing a lot of hope that may not be well-founded. According to Hyblock Capital, True Retail Accounts hold 90% of their Ethereum long positions, which puts them in the 90th percentile of all major cryptocurrencies. This extreme posture is especially interesting because the retail long percentage has a negative correlation of -0.86 with price movement. This means that if retail longs reach extremes, the probability of a reversal goes up a lot.
If the market goes against the dominant attitude, this crowding effect could lead to a classic bull trap, where too many people are in a position that is too bullish. When retail traders are this overwhelmingly biased toward longs, it usually means that most of the buyers who could buy have already done so, which means there isn’t much room for more rallies.
Funding Rates and Institutional Activity Provide Mixed Signals
Even though retail is very optimistic, data from the derivatives market gives a more complex picture. The Ethereum financing rates on Binance are still positive, but they are limited to 0.01% to 0.03%. This shows that the market is in a healthy mid-phase rise, not the exuberant 0.1% to 0.2% levels witnessed at the pinnacle of the 2021 bull market. Pelin Ay, a crypto analyst, says that these modest levels of leverage, along with rising spot demand, might help prices rise to $4,500-$5,000. However, if financing rates rise beyond 0.05%, it would mean that positions are too crowded and prices could fall in the short term.
At the same time, institutional investors are buying up during the slump. Tom Lee is in charge of BitMine Immersion Technologies. On Thursday, they bought an additional 104,336 ETH, which is worth about $417 million. This is on top of an earlier purchase of almost 202,000 ETH. The company’s total ETH reserve is currently worth $9.3 billion on the market, and Lee still thinks that the price will reach $10,000 per ETH by the end of the year.
Ethereum Price Prediction: Critical Week Ahead for Ethereum
Ethereum is reaching a crucial point in the $3,900-$4,000 support zone. Bulls need to protect this level to stop a bigger correction that could happen after MACD bearish crosses, like what has happened in the past. Man of Bitcoin, an Elliott Wave expert, says that as long as ETH stays above $3,899, it might go up directly, but if it drops below that level, it would mean that a bigger corrective wave is starting.
Bullish Scenario: If ETH can go back to $4,070 and stay above it, a rebound into $4,500-$5,000 is possible. This is because institutions are buying more ETH and the leverage levels are not too high.
Bearish scenario: If the price drops below $3,820, there is a good chance that selling will speed up toward $3,650-$3,550. If the bearish MACD signal plays out as it has in the past, there is a very high chance that the price will drop 46% to 60% from recent highs.
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