Ethereum experienced a sharp decline this week, but market sentiment among analysts remains cautiously optimistic as key support zones continue to hold. Despite dropping below $4,000, many traders still foresee a long-term breakout toward new all-time highs, with projections reaching as high as $10,000.
Ether Plunges 8% Amid Heavy Liquidations
Ether fell more than eight percent on Tuesday, slipping from highs above $4,300 to approximately $3,940. This sharp correction triggered significant liquidations across the crypto market. Data from CoinGlass revealed that over $650 million in leveraged positions were wiped out within 24 hours, including $455 million in long positions. Long ETH traders suffered $114.5 million in losses, signalling that many were unprepared for the dip.
The largest single liquidation occurred on the OKX exchange with an ETH/USD position worth $5.5 million. Heatmap data indicated strong buying interest between $3,670 and $3,800, suggesting that the retracement may stabilise within this range.
ETH/BTC daily chart. Source: Michael van de Poppe
Analysts Point to Technical Correction, Not Trend Reversal
Despite the downturn, several analysts argue that ETH is undergoing a standard technical pullback rather than signalling the end of its bullish trend. Michael van de Poppe, founder of MN Capital, noted that the ETH/BTC pair dropped to 0.032, calling it an “ideal zone for buys.” He added that Ethereum now needs to establish a higher low before reversing towards new highs.
Analyst Daan Crypto Trades echoed similar views, stating that while 0.032 has held firmly, Ethereum must decisively break above 0.041 against Bitcoin to resume upward momentum.
Signs of a Breakout Building on Higher Time Frames
Technical analysts remain encouraged by Ethereum’s broader market structure. Titan of Crypto emphasised that the Relative Strength Index (RSI) has broken out of a multi-year downtrend, indicating the possibility of an explosive move ahead.
If Ethereum follows a similar pattern to its mid-2020 breakout, price targets between $8,000 and $10,300 could come into play, based on Fibonacci projections. The widely followed phrase “ETH breakout is loading” continues to resonate among bullish traders.
Key Support at $3,800 Becomes Crucial
Pseudonymous analyst Chimp of the North highlighted $3,800 as a key support level to watch. A successful retest of this zone could pave the way for a renewed rally towards $5,000 and beyond. However, any daily close below this area risks further declines towards the 20-week simple moving average at $3,700, followed by $3,500.
Recent market stabilisation in Ethereum futures has encouraged expectations of a rebound towards $4,500 if current support persists.
Bull Flag Pattern Targets Long-Term Rally
On the weekly chart, Ethereum continues to trade within a bullish flag formation, often seen as a continuation pattern following a strong price surge. ETH is currently testing the lower boundary of the flag near $3,870, acting as immediate support.
ETH/USD four-hour chart.
A breakout above the upper trendline at $4,440 would confirm the pattern and potentially ignite a rally towards the technical target of approximately $10,050 — a 164 per cent increase from current levels.
However, momentum indicators reveal short-term caution. The RSI has declined from 74 to 54 in recent weeks, signalling that profit-taking may still weigh on price action before any sustained push higher.
Outlook: Correction Before Continuation
While Ethereum’s recent drop has shaken leveraged traders, spot buyers and long-term holders appear focused on the broader bullish structure. Market sentiment suggests that as long as $3,800 remains intact, the larger trend towards higher levels remains valid.
Investors now await confirmation through higher lows and renewed buying pressure. Should key resistance at $4,440 break, Ethereum’s trajectory could shift decisively towards new records, potentially marking the beginning of a major breakout cycle.
