Ethereum Faces $4,000 Test as Bulls Stand Firm Against Bearish Pressure

Ethereum has dropped to its lowest value in two months, raising alarms among both traders and analysts about a possible slide to $3,500. Currently hovering around $3,800, the cryptocurrency is feeling the effects of increased market turbulence, Bitcoin’s recent slump, and changing attitudes among institutional investors. Various technical signals and market trends indicate that

may encounter additional downward pressure in the near future, although debates about its long-term recovery continue to focus on its underlying strengths.

The latest wave of selling intensified after Bitcoin dropped below $110,000, sparking a widespread liquidation event that erased nearly $1 billion from crypto positions. As the second-largest digital asset, Ethereum was hit especially hard, with $312 million in long trades wiped out. News of BlackRock offloading $25.6 million worth of ETH further fueled negative sentiment, hinting at possible institutional withdrawals. At the same time, options data shows a surge in demand for puts, and some analysts caution that a fall below $4,000 could speed up further losses.

Chart analysis points to weak support levels for Ethereum. The $3,800 zone, considered a significant psychological barrier, has been challenged several times recently. If Ethereum closes below this point for a sustained period, the next likely target is around $3,500, with the possibility of deeper declines toward $3,200 if selling accelerates. The RSI, now at 38, indicates bearish momentum, while the 50-day moving average ($4,403) has turned into resistance, capping any upward moves. Moreover, the total value locked (TVL) in Ethereum’s layer-2 networks has dropped 25% since its December 2024 peak, suggesting a decrease in institutional participation.

Expert opinions remain divided. Veteran crypto analyst Ted Pillows foresees a potential dip to $3,500 before any rebound, drawing comparisons to Bitcoin’s 2020 price cycle. Benjamin Cowen believes a short-lived rally toward $4,900 could act as a “bull trap,” followed by a correction down to the 21-week EMA (below $3,500). On the other hand, options strategist Adam warns that a clear move below $4,000 could prompt a bearish revaluation in the options market. These differing perspectives highlight the market’s ongoing volatility and unpredictability.

Several factors will influence Ethereum’s long-term prospects. The upcoming Pectra upgrade, set for the first quarter of 2025, is designed to boost Ethereum’s scalability and cross-chain compatibility, but it has yet to drive enough fee growth to outpace rivals like

and Tron. Regulatory developments, especially around spot ETF approvals, remain a key driver. So far, ETF inflows have been modest, and institutional interest in staking is still subdued. Nonetheless, large-scale moves—such as a recent $1 billion ETH purchase by a whale—indicate that some investors remain optimistic about Ethereum’s future.

In spite of these hurdles, Ethereum’s core fundamentals are still strong. The platform continues to be a hub for innovation, with layer-2 solutions and DeFi projects maintaining their presence even as the market contracts. However, Ethereum’s continued adoption will depend on its ability to stand out from new competitors and execute its scaling plans. For now, the $4,000 level remains a crucial point of contention between bullish and bearish traders.