- Ethereum trades near the support level, with $5,000 or $3,800 as the next decisive targets.
- Bearish RSI divergence shows weakening momentum despite Ethereum’s higher price highs.
- $2.1B worth of Ethereum withdrawn signals strong long-term holding sentiment.
Ethereum trades near support inside its longer-term ascending channel, remaining in the spotlight as ETH trades near $4,470 ahead of a new challenge to the stepping-back levels. The next few sessions may determine the direction for both assets. If Ethereum could recover, the $5,000 level could also recommence; a breakdown, however, would drag the price towards $3,800 and knock down the overall sentiment almost entirely.
On the daily chart, the bullish structure of Ethereum remains intact, but the beginning of the weakening of the dynamics is becoming noticeable. This has resulted in a bearish divergence on the RSI, where the highs are falling while the price is actually making higher highs. This disconnect means that buyers are losing strength and often that a consolidation or retracement phase is in full swing.
Source: TradingView
Bulls Battle to Defend Key Level
Price action is testing mid-channel support around $4,200, an area that has acted well as a solid support wall. If bulls are able to protect this area, Ether could continue to hold the technical base for a new advance. A break in support would probably point to a closer look at the $3,800 level as a likely entry point for a deeper pullback.
Also Read: Ethereum (ETH) Eyes $4,450 Breakout While Downside Targets Stay At $3,700
According to analyst Ali, 500,000 Ethereum, worth over $2.1 billion, was pulled out of centralized exchanges over the course of a week. The large withdrawals have frequently been interpreted as a sign that investors prefer a holding pattern over time horizons other than very short.
Source: X
Ethereum Derivatives Show Weakness Despite Recent Price Highs
According to data from Coinglass, the total amount of liquidations across all ETH futures markets in the recent 24 hours is $56.7 million. Of this, the long positions were worth $22.7 million, whereas the short positions were worth $34 million.
Funding rates across exchanges also are showing caution. While Ethereum recently hit a new high closer to $4,900, funding rates peaked lower than they were during previous cycles when ETH was nearer to $4,000. As market participants aren’t as bullish in terms of putting on aggressive leveraged long trades under Spot strength.
Source: CryptoQuant
Meanwhile, the macroeconomic environment continues to be accommodative of risk assets. With a FedWatch Tool CME the odds of a Fed Funds rate cut in September is now above 95.6%. Fed Chair Jerome Powell’s dovish comments on August 22 at Jackson Hole helped confirm expectations of easier policy.
Source: CME Group
Past market corrections have been preceded by divergence between spot results and the conduct of derivatives. If speculative demand does not return, Ethereum could be condemned to a range of sideways trading or a deeper crash in price. Yet for now the long-term ascending channel is intact, providing hope for bulls that the overall strength still is intact so long as support holds.
The battle between short- and long-term Ethereum average holders for $4,200 support is now carving out that coin’s near-term future trajectory, and its ripples will be felt throughout the crypto ecosystem. If the defense is successful, that will rebuild confidence and even earn $5,000.
Also Read: Ethereum Poised for Bullish Reversal After Investors Return to Accumulating
