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Tag: Ethereum correction

  • Ethereum’s Q1 Outlook: Analyst Shares Historical Setup As Price Nears Key Resistance

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    While Ethereum (ETH) attempts to turn a crucial level into support, some analysts have shared a bullish outlook for the cryptocurrency, which could send its price above the $4,000 barrier in the first quarter of 2026.

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    End-Of-Year Weakness To Ignite Q1 Rally

    On Monday, Ethereum broke above the $3,200 barrier for the first time in nearly a month, hitting a four-week high of $3,259. The cryptocurrency has seen a 8.3% surge from the crucial $3,000 level since Friday, consolidating above the $3,100 level over the weekend.

    Now, the King of Altcoins is trying to hold the key resistance level and turn it into support. Amid this performance, some market observers shared a potential setup that could lead to a significant rally during the next three months.

    In an X post, analyst Niels affirmed that Ethereum’s quarterly close in the red is “not as bearish as it looks.” Notably, the altcoin recorded its worst Q4 in six years after closing the quarter with a negative return of 28.28%, according to CoinGlass data.

    This marks ETH’s first negative Q4 close since 2022, and its worst end-of-year performance since 2019, when it registered a negative return of 28.9%. Nonetheless, Niels highlighted that this opens the door for an “interesting” setup ahead of the altcoin’s expected seasonality.

    ETH’s quarterly performance over the years. Source: CoinGlass

    “History tells an interesting story: every single time ETH has finished Q4 in the red, the next Q1 has closed green,” the analyst explained, asserting that “year-end weakness has usually acted as a reset, not a reversal.”

    Per the post, the end-of-year leverage flush and sentiment cooling have previously enabled Ethereum to start the new year “from a cleaner base,” which has allowed the altcoin to register quarterly returns of up to 52% in recent years.

    “If that pattern holds, Q4 wasn’t the warning; it was the setup heading into Q1,” he suggested.

    Ethereum Prepares For 30% Breakout

    As the price records an 11% weekly surge, analyst Ted Pillows pointed out that the cryptocurrency is about to face an important zone that has served as resistance for nearly two months.

    Since the early November pullback, the largest altcoin by market capitalization has been trading between the $2,700-$3,400 price range, experiencing strong resistance around the $3,000 and $3,200 levels.

    Now that the mid-zone of the range has been momentarily reclaimed, ETH must hold its momentum and turn the upper boundary into support. “A reclaim of this level will pump Ethereum towards the $3,800-$4,000 level,” where the next major resistance is located, Ted explained on Monday morning.

    On the contrary, a rejection from this resistance zone could send the ETH price toward the $3,000 support, while risking a longer consolidation within its two-month range.

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    Meanwhile, analyst Ali Martinez discussed the altcoin’s consolidation, pointing to a symmetrical triangle pattern forming on its chart. According to the analyst, Ethereum has been compressing between the pattern’s ascending and descending trendlines since November, awaiting a 30% move.

    If the price holds its current breakout from the upper boundary, the cryptocurrency could see a rally toward the $4,000 area in the coming weeks, positioning ETH for a retest of the Q3 levels.

    As of this writing, Ethereum is trading at $3,253, a 3.4% increase in the daily timeframe.

    Ethereum, eth, ethusdt
    ETH’s performance on the one-week chart. Source: ETHUSDT on TradingView

    Featured Image from Unsplash.com, Chart from TradingView.com

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    Rubmar Garcia

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  • Ethereum Faces Risk As Binance Leverage Ratio Skyrockets To Record Levels

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    Ethereum is at a decisive moment after a turbulent week of trading. Following a powerful surge on Friday that pushed the price into new highs, ETH quickly faced selling pressure, leading to a sharp drop by Monday. Now, the asset is trying to stabilize above the $4,400 level, a critical zone that bulls must defend to prevent further downside momentum.

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    The recent volatility highlights how fragile sentiment can become at major turning points. While bulls remain optimistic that ETH can sustain momentum and push toward the long-awaited $5,000 mark, bears argue that the market structure suggests more downside could follow if support fails.

    Adding to this uncertainty, analyst Darkfost has issued a warning about rising risks in the derivatives market. According to his analysis, the Binance Estimated Leverage Ratio (ELR) on ETH has reached its highest levels ever recorded, signaling extreme risk conditions. The ELR measures how heavily leveraged positions have become relative to overall open interest.

    When leverage skyrockets, markets often experience heightened volatility. Traders taking on excessive risk can trigger forced liquidations, amplifying price swings in both directions. With ETH now sitting at a fragile support level, the combination of leverage buildup and recent price swings makes the coming days critical for Ethereum’s short-term trajectory.

    Ethereum Leverage Risks Grow on Binance

    According to Darkfost, the Estimated Leverage Ratio (ELR) is one of the most reliable indicators to measure whether a market is becoming dangerously over-leveraged. The ELR combines Open Interest data with overall market activity to highlight the extent to which traders are relying on borrowed funds to amplify their positions.

    Ethereum Binance Estimated Leverage Ratio | Source: CryptoQuant

    Recent data shows that Open Interest on Binance just hit a new all-time high of $12.6 billion on August 22, reflecting record speculative activity. For context, back in July 2020, the ELR on Binance was just 0.09, a relatively safe level. Today, that figure has skyrocketed to 0.53, marking the highest reading ever recorded. Such a sharp increase suggests that traders are entering positions with unprecedented leverage.

    Darkfost explains that when leverage climbs to these extremes, the short-term market outlook becomes risky. Excessive optimism often leaves participants vulnerable to forced liquidations. Once liquidations cascade, they can magnify price swings far beyond what would happen in a spot-driven move.

    Despite heavy institutional and whale accumulation in Ethereum, Binance remains the largest hub for trading activity. With derivatives volumes outweighing spot activity, leveraged positioning now has the power to dictate short-term price moves.

    Given that this spike in leverage comes just as Ethereum has broken above its all-time high, the risk of a deleveraging event is high. Such an event could temporarily drive ETH lower, wiping out leveraged positions before the market regains balance. Yet, many analysts believe this would act as a reset, ultimately paving the way for Ethereum to retest and potentially surpass the $5,000 level, which remains the key target for bulls.

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    Holding Key Support Amid Selling Pressure

    Ethereum is currently showing signs of fragility after its strong rally last week. On this 4-hour chart, ETH trades around $4,426, holding near a crucial support zone defined by the 50-day moving average (blue line) at roughly $4,451. Price action shows a sharp rejection from highs above $4,800, followed by a steep retracement that now challenges short-term momentum.

    ETH consolidates around key levels | Source: ETHUSDT Chart on TradingView
    ETH consolidates around key levels | Source: ETHUSDT Chart on TradingView

    The $4,400 region has emerged as an immediate support level, where ETH is attempting to stabilize. A sustained hold above this area could allow bulls to regroup and attempt another push toward the $4,800–$5,000 resistance zone, which remains the next psychological target. Conversely, if the $4,400 level fails, ETH could slide toward the 100-day moving average (green line) around $4,350, with further downside risk toward the 200-day average (red line) near $4,090.

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    The structure still favors bulls in the broader trend, but the recent correction highlights the market’s sensitivity to leverage and short-term volatility. For traders, the $4,400 level is key: holding above it keeps the bullish continuation alive, while a breakdown may trigger deeper profit-taking. Overall, ETH remains in an uptrend, but volatility at these levels demands caution.

    Featured image from Dall-E, chart from TradingView

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    Sebastian Villafuerte

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