Ethereum Price Prediction: Key Levels to Watch as ETH Recovers Above $4K

Ethereum (ETH) has bounced back strongly off the $3,500 level after last Friday’s flash crash derailed the progress of altcoin season temporarily.

Nearly $4 billion worth of ETH long positions were flushed out of the market in a single day, the largest wipe-out in a month, reflecting how leveraged and “one-sided” the market was.

Meanwhile, open interest in Ethereum futures dropped from $59 billion to $42 billion, as traders were spooked by Trump’s decision to impose a 100% tariff on Chinese imported goods all of a sudden.

Ethereum Open Interest (OI) – Source: CoinGlass

Although OI has recovered partially to $47 billion, it is still quite far from its recent peak of $70 billion. It may take a while for traders to jump back into the market as they need assurance that these kinds of “black swan” events will not happen again anytime soon.

Data from DeFi Llama shows that Ethereum’s stablecoin balance has stood above $300 billion throughout the month, meaning that money has not been taken out of the crypto ecosystem despite this decline.

Meanwhile, ETH-linked exchange-traded funds (ETFs) recorded a mild $175 million net outflow on Friday, but mostly because Trump’s announcement was made after the market closed.

Ethereum Needs to Stay Above $4,000 to Keep Rallying

In the past 24 hours, ETH’s price has advanced by 9.2% to $4,164, near its session high of $4.2K.

Trading volumes have gone up by 47% to $65 billion, currently accounting for 12% of the asset’s circulating market cap. This highlights that trading activity remains quite high, and, in this case, it favors a bullish outlook as buying pressure has increased.

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

The daily chart shows that ETH bounced off $3,500 as buyers’ pending orders backstopped the crash.

However, this level could be revisited soon if the $4,000 support is lost. Today’s ETF activity could either confirm or invalidate a bearish outlook.

If investors take out billions from these vehicles, it would mean that sentiment has shifted, as ETH-linked funds had been attracting billions for days before the crash.

The Relative Strength Index (RSI) sent a sell signal upon crossing below the 14-day moving average, increasing the odds of a deeper correction.

The $3,500 level matches a trend line support for ETH that coincides with its 200-day exponential moving average (EMA), making it the key demand zone to watch in case the selling spree resumes.

Meanwhile, if prices keep rallying, we could witness another leg up to $4,800 soon that may ultimately result in a bullish breakout to $5,000, as ETH could play catch-up with BNB.

What Could Derail Ethereum’s Recovery?

Tomorrow, the head of the Federal Reserve, Jerome Powell, will be giving a speech at the National Association for Business Economics (NABE). Any remarks concerning the impact of Trump’s decision on the economy and how the Fed may react to these latest events could have a major impact on crypto prices.

It has been the baseline assumption for market participants that the Fed would cut rates again this month by another 25 basis points.

However, if they opt for a “wait and see” approach once again and delay the cut, that could prompt an even sharper decline in the price of cryptocurrencies.

Only BNB Coin (BNB) has managed to make multiple all-time highs this year among altcoins. Ethereum, Solana (SOL), and XRP (XRP) have lagged behind their peers as reflected by their much lower year-to-date (YTD) gains.

Market sentiment soured as a result of last Friday’s crash, and it is highly likely that the market will need further evidence to convince itself that the worst is over.