Ethereum has once again struggled to surpass the critical $4,000 resistance level, leading to a significant price drop. However, the cryptocurrency is now positioned at a major support zone, where analysts expect a rebound followed by a period of consolidation.
Technical Analysis
Daily Chart Overview
The $4,000 price level has been a pivotal resistance for Ethereum throughout the past year, repeatedly thwarting bullish attempts due to strong selling pressure.
Recently, ETH faced another rejection at this level, sparking a notable sell-off. This decline was exacerbated by comments from Federal Reserve Chairman Jerome Powell, hinting at a potential pause in the central bank’s ongoing rate-cutting policy.
Despite the downturn, Ethereum found strong support at the $3,000 mark, a critical price level. This led to a rebound above $3,500, with the price currently consolidating between $3,500 and $4,000. Analysts anticipate that this consolidation phase could pave the way for a renewed bullish attempt to break the $4,000 resistance.
4-Hour Chart Insights
On the 4-hour chart, the rejection at $4,000 triggered a sharp decline, breaking below the ascending wedge pattern—an indicator of bearish dominance. This move led to a pullback, followed by a continuation of the downtrend.
Currently, ETH is trading within a crucial support zone, defined by the 0.5 ($3,200)–0.618 ($3,000) Fibonacci retracement levels. This zone is expected to stabilize the price in the short to mid-term, allowing for further consolidation and minor retracements. Should this support hold, it could attract buyers, potentially setting the stage for another attempt to challenge the $4,000 resistance.
Onchain Analysis
Ethereum’s inability to reclaim the $4,000 level resulted in significant liquidations in the futures market, triggering a flash crash and dampening market sentiment.
The funding rates metric, a reliable indicator of futures market sentiment, reveals a sharp spike followed by a substantial drop after the rejection at $4,000. This reset in funding rates often signals a cooling phase in the market, which can create conditions for a sustainable bullish trend.
A similar pattern was observed in January 2024 when a sudden drop in funding rates calmed the market and preceded Ethereum’s next major rally. If history repeats itself, the current market reset could mark the beginning of another bullish phase for Ethereum.