Ethereum’s $4,000 Battle: Critical Support Tested as Bulls Dig In

Ethereum faces its moment of truth at the $4,000 threshold—a level that separates consolidation from capitulation.

The Pressure Cooker

Traders watch order books thin out as Ethereum tests waters below key technical levels. The $4,000 support isn't just a number—it's the psychological line where institutional money meets retail conviction.

Market Mechanics at Play

Liquidity pools cluster around the $4,000 mark like vultures circling wounded prey. Every bounce attempts to reclaim higher ground, while shorts pile on at the first sign of weakness. The entire crypto ecosystem holds its breath—DeFi protocols, NFT markets, and layer-2 networks all hinge on ETH's stability.

The Bull Case Stands Firm

Network fundamentals scream strength even as price action whispers uncertainty. Ethereum's burn mechanism continues devouring supply while staking yields attract long-term holders. Traditional finance might still be figuring out crypto custody, but smart money recognizes value when it sees $4,000 ETH.

This isn't just another correction—it's the proving ground for the next leg up. Either Ethereum holds here and confirms its digital oil status, or we discover Wall Street was right about volatility all along. Place your bets.

• Ethereum’s price dropped to $4,145, its lowest since August 20, continuing a downward trend.
• Analyst Ali sees a potential rebound to $4,400 if Ethereum holds the $4,000 support level.
• Ethereum’s RSI is below 50, signaling strong selling momentum and negative market sentiment.

Ethereum’s price has plunged this week, continuing a downward trend that began several weeks ago. The cryptocurrency hit an all-time high of $4,945 before quickly plunging back down to $4,145 Monday, its lowest price since Aug. 20. The slide has been sudden, and Ethereum’s price declined even further during the last couple of days. That decline has rattled investor confidence.

Analyst Ali has mentioned a preferred reversal to the upside for ETH providing that $4,000 defends as support. If this support holds, ETH might recover towards the $4,400 level. Traders are eyeing this level as a potential inflection point.

Source: X

Ethereum Struggles Below Key Support Levels

The daily chart shows ETH is now trading below its critical support levels. The 50 EMA has not been able to offer any support, the currency is currently within the Ichimoku cloud. ETH also broke out of a bullish pennant pattern, hinting that upside momentum was not going to last. 

This has been a key resistance zone through December. Moreover, ETH has approached the upper limit of the trading range of Murrey Math Lines tool, signaling more descending pressure. Investors are worried the asset won’t rebound.

Downtrend continuation technicals indicate ETH’s price may keep on the downtrending movement. Sellers now aim to test the following support at $3,750, which is a crucial point in the Murray Math Lines analysis. 

Source: TradingView

If the black line is broken, further downside should be expected in Ethereum. But if ethereum extends gains above $4,375, the bearish thesis might be proven wrong. That is a significant level to watch for possible reversal.

Key Levels and Decreasing Investor Interest

The RSI for ETH is also below the neutral 50 indicator. This indicates that there is strong selling momentum and with it a negative market sentiment. A double-top pattern at $86 led to the RSI drop, indicating that downside momentum is likely to come in the next few days. Ethereum is currently facing a growing number of risk factors from a technical perspective.

The sharp decrease in ETH’s price is explained by the decreasing interest among American investors. According to the data, Ethereum ETFs suffered net outflows worth about $140 million on Tuesday. The previous day had also seen a loss of $75 million. 

The outflows demonstrate the shrinking demand for ETH, especially among large investors. This has become a major factor that contributed to the price decrease. Ethereum ETFs, which received inflows of up to $13.7 billion in total, currently have around $27.4 billion in assets under MANA gement. 

The largest share is owned by BlackRock’s ETHA ETF, which accounts for more than $15.9 billion of assets. The rest of the major funds, including Grayscale, Fidelity, Bitwise, and VanEck, also have a considerable share in ETH. Their falling interest has further pressured the price of the cryptocurrency.

Furthermore, ETH demonstrated a performance that aligns with the trend in the cryptocurrency market as a whole. Bitcoin, the corresponding asset for ETH, has also decreased in price from $124,200, the record since launch, to $112,000. They further created following the reduction of the total market capitalization of cryptocurrencies to $3.87 trillion.