ETH drops 4% daily as bears regain control. Next $2,000?

ethereum remains in a downtrend and price action shows insufficient bullish momentum for a reversal.

In the near term, the cryptocurrency is likely to enter a consolidation phase within a critical range, and mild bearish retracements seem much more likely.

By shayan

The daily chart

On the daily chart, ethereum has been in a sustained downtrend since being rejected at its yearly high of $4K. The price has consistently formed lower lows and lower highs, creating a descending channel that reflects the overall bearish market sentiment. This pattern highlights the pessimism among market participants regarding eth’s broader trajectory.

Recently, the price was rejected at the middle boundary of the channel around $2.7K, which triggered another bearish pullback.

Currently, eth is trading within a key range, supported by the $2K level and capped by the mid-channel boundary near the $2.5K resistance. Until the price breaks out of this range, further consolidation is expected.

The 4-hour chart

On the 4-hour chart, ethereum encountered increased selling pressure around the resistance zone between the 0.5 ($2,600) and 0.618 ($2,700) Fibonacci levels, which resulted in a significant drop towards $2,000. The current price action indicates that bearish sentiment still dominates the market, and sellers are likely aiming to push the price below its current yearly low at the $2,000 level.

eth is forming an ascending wedge pattern and consolidating near the lower boundary of this formation. A break below this pattern could result in a further drop towards $2000, which could break this support.

However, if buying pressure increases in the near term, ethereum may experience a bullish rally, with the price retracing towards the 0.5 Fibonacci level at $2.6K.

By shayan

The perpetual futures market plays a crucial role in shaping the overall price movement of the broader cryptocurrency market.

Therefore, by examining the sentiment of futures traders, participants can gain valuable insights into potential price trends. This chart shows the 50-day moving average of ethereum funding rates, providing a broader view of whether buyers or sellers are more aggressively executing orders via market orders in the futures market.

Recently, the 50-day moving average of eth funding rates has been consistently in a downtrend, reaching its lowest levels in 2024.

This persistent decline highlights the prevailing bearish sentiment, indicating a lack of buying interest from traders. For ethereum to recover and reach higher price levels, demand in the perpetual futures market must increase. If the current trend of negative funding rates continues, ethereum is likely to experience further price declines in the medium term.

However, it is important to note that while negative funding rates are often considered bearish, they can sometimes be an early sign of a market recovery. This is because they can trigger cascades of short position liquidations, which can trigger price reversals, but this largely depends on whether there is enough spot buying pressure to support a rally. Without increased demand from spot buyers, the price of ethereum may remain under pressure.

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