ETH Falls 4% Daily As Bears Take Back Control, $2000 Later?

Ethereum remains in a downtrend, with price action showing insufficient bullish momentum for a reversal.

In the near term, the cryptocurrency is likely to enter a consolidation phase within a critical range, with mild bearish pullbacks looking 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 $4,000. The price has consistently formed lower lows and highs, creating a descending channel that reflects the overall bearish market sentiment. This pattern highlights pessimism among market participants regarding ETH’s broader trajectory.

Recently, the price was rejected at the middle limit of the channel around $2.7 thousand, leading to another bearish pullback.

ETH is currently trading within a key range, supported by the $2,000 level and bounded by the average channel boundary near the $2,500 resistance. Until the price breaks out of this range, further consolidation is expected.

Source: TradingView The 4-hour chart

On the 4-hour chart, Ethereum found increased selling pressure around the resistance zone between the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci levels, resulting in a significant drop towards 2 thousand dollars. Current price action indicates that bearish sentiment still dominates the market, with sellers likely aiming to push the price below its current annual low at the $2,000 level.

ETH is now forming an ascending wedge pattern and consolidating near the lower boundary of this formation. A break below could lead to a further decline towards $2,000, potentially breaching this support.

However, if buying pressure builds in the short term, Ethereum may see a bullish rally, with the price retracing towards the 0.5 Fibonacci level at $2.6K.

Source: TradingView

By Shayan

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

Therefore, by examining the sentiment of futures traders, participants can gain valuable information about 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 executing orders more aggressively using market orders in the futures market.

Recently, the 50-day moving average of ETH funding rates has been consistently downtrending, 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 although negative funding rates are often considered low, they can sometimes be an early sign of a market recovery. This is because they can lead to short liquidation cascades, which can lead to price reversals, but this is highly dependent on whether there is enough spot buying pressure to sustain a bounce. Without stronger demand from spot buyers, Ethereum’s price may remain under pressure.

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