Ethereum: Why a drop to $2,000 is more likely than a return to $4,000?

Mike McGlone’s Bearish Scenario: The End of Euphoria?

Mike McGlone, known for his sharp macroeconomic analyses, doesn’t mince words when it comes to the second-largest cryptocurrency on the market. According to his recent analysis, Ethereum faces headwinds that could trigger a severe correction. The main argument rests on a “mean reversion”: after the excesses of previous years, ETH could need to purge further before returning to a healthy bullish trajectory.

The analyst also highlights the persistent correlation between risk assets and the volatility of traditional stock markets. If the equity market were to falter, Ethereum, often considered an indicator of risk appetite, could be the first to suffer a panic sell. For McGlone, the current market structure suggests that the path of least resistance points south, calling into question hopes for a near-term ATH.

$2,000 vs $4,000: The Battle of Psychological Levels

Technically, the situation is tense. The $4,000 level now acts as a massive resistance, a glass ceiling that buyers (bulls) struggle to break despite several rebound attempts. Indeed, it’s a massive 2-week order block that has been pushing back ETH’s price for several years.

Conversely, the $1,600 zone represents a critical historical support. If the price were to break its current trend, this level would act as the last line of defense before a deeper drop. Moreover, this bullish trendline has a good chance of being liquidated, precisely to carry out this purge of all the longs accumulated below.

This forecast is based on observing the range in which Ethereum has been trading for several months. McGlone notes that the asset seems “heavy”, unable to generate the momentum necessary for a true breakout. As long as buying volumes don’t return massively to counter this selling pressure, the risk of a slide toward the bottom of the range remains the dominant scenario.

Should We Fear Capitulation or Watch for Opportunity?

Should this pessimistic analysis necessarily scare away investors? Not necessarily. In crypto jargon, a return to major supports like $1,600 is often perceived by Whales as an ideal accumulation zone. However, caution is warranted: if this support gives way, the door would be open to increased volatility.

Traders will closely monitor the market’s reaction in the coming weeks as the S&P 500 could well begin a correction.

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