Ethereum Price Prediction: ETH Risks Drop to $2,600 After Trend Line Break

Ethereum (ETH) has performed positively in the past 24 hours, rising by 1.7% and once again climbing above the critical $4,000 mark level as the market seems to be trying to leave behind last week’s chaos.

Despite today’s jump, ETH has still delivered a 3.2% loss in the past 7 days after President Donald Trump decided to raise tariffs on Chinese imported goods by another 100%.

The decision derailed the market’s ongoing rally and sent ETH to its lowest level in months at $3,500 during a flash crash that evaporated over $16 billion worth of crypto long positions in a matter of hours.

ETF Net Outflows Hit $300M Last Week

Last week, nearly $312 million was withdrawn from Ethereum-linked exchange-traded funds (ETFs) as the price plummeted to $3,700.

Although this marks a significant shift from the latest trend of strong net inflows, it is still a meager figure that accounts for only 2% of the funds’ assets under management (AUM) based on data from Farside Investors.

Market sentiment is still sour despite today’s recovery. The Fear and Greed Index currently sits at 30, underscoring that fear has gripped market participants after the latest developments that unfolded in the past couple of weeks.

Moreover, Trump derailed altcoin season for now. Even though BNB Coin (BNB) jumped to a new all-time high the week after he imposed higher tariffs on China.

Altcoin Season Index – Source: CoinMarketCap

The Altcoin Season Index has declined from a recent peak of 78 in September 19 to 27 at the time of writing, as the combined market cap of tokens in this category dropped from $1.8 to $1.6 trillion.

This week will be critical for the market, as the United States will publish its inflation data covering September on Friday. Analysts expect that inflation will rise by 3.1% on an annualized basis.

Nonetheless, if it results that inflation comes in lower than expected, this could trigger as a strong rally as it would reassure the market that the Federal Reserve will move to cut rates during next week’s FOMC meeting.

ETH Broke Its Trend Line Support and Could Drop to $2.6K

The daily chart shows that ETH broke below its trend line support recently and is now retesting this line from below.

ETH/USD Daily Chart (Coinbase) – Source: TradingView

If this retest results in a rejection of a move above $4,000 and ETH is pushed below $3,700, this could mark the beginning of a bearish cycle for the token, as the technical setup indicates that the token’s latest consolidation phase was resolved to the downside.

Moreover, if negative momentum gains traction, we could see ETH plunging to $2,600 in the near term, as this was the nearest area of accumulation where the market may find strong interest again.

The Relative Strength Index (RSI) is about to send a buy signal upon crossing the 14-day moving average. If that happens, and ETH rises past $4,300 or so, this would invalidate the bearish outlook shared above, as it means the token will climb back above its trend line support.

In this case, this latest move downwards will turn into a bear trap and could set the stage for a short squeeze that could finally push ETH above $5,000.