Ethereum: Temporary Relief After the Crash?
After a black week that saw Ethereum’s price plunge nearly 43% in nine days, hitting a concerning low around $1,750, the market’s second-largest cryptocurrency is attempting to lift its head. Currently, ETH is trading in a zone between $2,100 and $2,000, benefiting from positive correlation with Bitcoin and the recovery of US equity markets (S&P 500).
This rebound of over 15% from the lows offers a breath of fresh air to investors, but caution remains warranted. The current movement looks more like a technical reaction on a major support zone rather than a genuine organic trend reversal. To validate a sustainable recovery, buyers will need to defend this level with volume, which is not yet guaranteed at this stage.
Traders Remain Cautious: What Derivatives Are Saying
Despite the rise in spot price, the derivatives market displays a decidedly bearish sentiment. Analysis of futures contracts shows that the premium (the spread between future price and spot price) is stagnating around 3%. Normally, a healthy and neutral market evolves with a premium of 5% to 10%. This figure below 5% indicates that institutional traders hesitate to bet on a sustainable rally and are hedging against the risk of further downside.
Moreover, the fundamentals of the Ethereum network are weighing on investor sentiment. Inflation of ETH supply has climbed to 0.8% on an annualized basis over the last 30 days, undermining the deflationary “ultra sound money” narrative. With slowing on-chain activity and declining transaction fees, the burn mechanism is no longer sufficient to offset new issuance, adding structural selling pressure.
Scenarios: Are $1,300 Levels Inevitable?
From a technical perspective, Ethereum finds itself at a crossroads. For the bulls, the immediate objective is to transform the $2,000 zone into solid support to then target the next resistance around $2,300. A confirmed breakout above this level could invalidate the short-term bearish thesis and attract new capital.
Conversely, if rejection is confirmed below $2,150, the risk of a return toward the $1,750 support is high. A break of this key level would open the door to a deeper correction, potentially toward the order block around $1,280.
This major demand zone and a downside liquidation of a bullish trendline in HTF would offer an ideal scenario for a bullish reversal of ETH. Indeed, this would allow ETH to relieve itself of late longs below the trendline and attract smart money.
As the market attempts to stabilize, the crucial question for the coming days is that of institutional participation. Without a clear return of confidence in derivatives markets and an increase in network activity, this rebound could be nothing more than an exit opportunity for “whales” trapped higher up.
Related Articles:
