Ethereum Price Prediction: RSI Crossover Favors Major Correction to $2.5K

Ethereum (ETH) has gone down by 10% already in the past month as the market struggled to move past the latest all-time high, while last Friday’s flash crash worsened the token’s short-term outlook.

Altcoin season has already started with top tokens like BNB Coin (BNB) already making several all-time highs, following Bitcoin’s footsteps.

On August 24, ETH hit a fresh price record at $4,953, but has not managed to retest this level lately, even though net inflows to exchange-traded funds (ETFs) linked to the top altcoin have received billions in a short period.

Ethereum ETFs Net Inflows – Source: Farside Investors

From September 29 to October 8, investors poured nearly $2 billion into ETH-linked ETFs, underscoring the market’s rising interest and bullish stance on the token.

Meanwhile, after three consecutive days of negative net inflows, including last Friday’s steep drop, ETFs are back to positive territory with another $400 million coming in the last two days.

Ethereum Could Drop to $2,500 If This Historical Pattern Repeats

Ethereum’s weekly chart has sent a powerful sell signal that could spell trouble for the altcoin’s latest rally.

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

The Relative Strength Index (RSI), a momentum indicator, has dropped below the 14-day exponential moving average (EMA), indicating a change in the direction of the price trend.

The last two times that this has happened, ETH has dropped by 49% and 63% after hitting the $4,100 threshold twice. The price currently sits at that level, but is retesting it from above as the latest uptrend has finally pushed ETH to a higher high.

In both cases, ETH either dropped to or below the 200-day exponential moving average (EMA). If that’s the case now, the top altcoin could drop to $2,500 in the mid-term, meaning a 37.5% downside potential from where the token is right now.

Nonetheless, there is a trend line support at $3,500 that could still act as a cushion for any upcoming drop. This would translate into a minor downside potential of just 12.5% but still fits into the category of a major pullback, considering that we are coming out of $4,700.

A less pronounced 25% overall decline at this point from the latest swing high could be expected as market conditions have improved compared to the past two instances.

Hence, the $2,500 bearish target would be a ‘doomsday’ scenario and not necessarily the most likely landing zone for ETH if the latest wave of selling continues.

Interest Rate Decision Could Prompt the Next Wave of Selling

Market sentiment remains a bit sour as investors are skeptical that the worst is over. Trump’s hostile tariff increase on Chinese imported goods may not have taken its full toll yet.

The Federal Reserve will meet later this month to discuss whether they it cut interest rates again by 25 basis points, as the market widely expects. If they opt to postpone that rate cut amid the latest developments, this could result in a dramatic decline for cryptos as it would throw out of the window the market’s baseline scenario.

Such a drop could occur before the FOMC meeting if Fed officials like Chairman Jerome Powell hint at this possibility publicly.