Ethereum (ETH) has faced a sharp downturn over the past week, shedding nearly 8% of its value as traders rushed to take profits and broader risk sentiment weakened across the crypto market. But despite the recent dip, a growing number of analysts and on-chain experts believe that this correction might be setting the stage for a much larger breakout, potentially toward the long-anticipated $10,000 mark.
While short-term volatility remains high, long-term fundamentals and market positioning suggest that Ethereum’s bull cycle could still have plenty of room to run.
A Sudden Pullback or a Healthy Reset?
After climbing steadily for much of September, Ethereum fell from $3,950 to around $3,620 within a few days. The decline mirrored broader weakness in major digital assets, with Bitcoin (BTC) also cooling off after failing to sustain above the $70,000 resistance.
Data from CoinGlass showed over $120 million in ETH long positions liquidated in just 48 hours, indicating that over-leveraged traders were forced to exit as prices slipped.
However, analysts suggest that such shakeouts are typical during bull market phases.
“This correction is more of a healthy reset than a reversal,” explained Michael Van de Poppe, founder of MN Trading. “Ethereum was overextended after weeks of steady gains. Clearing excessive leverage prepares the market for a stronger base.”
Historically, Ethereum has shown a pattern of short but intense corrections before continuing its upward trajectory, a rhythm that many traders are once again betting on.
ETH’s Critical Support Levels
As of writing, ETH trades just above $3,600, with technical analysts watching key levels closely.
Immediate support: $3,550 for a zone that has held through three separate retests.
Next major support: $3,400 the level that aligns with Ethereum’s 50-day moving average.
Resistance to watch: $3,950–$4,000 is the ceiling ETH must break to regain bullish momentum.
According to market data, Ethereum’s Relative Strength Index (RSI) on the daily chart has cooled from overbought levels near 70 down to the mid-40s, indicating potential room for a rebound.
“The setup looks like classic accumulation,” said Ali Martinez, an on-chain analyst. “Every dip under $3,600 has seen smart money buying. Exchange outflows are ticking up again, suggesting large holders are positioning for a push higher.”
On-Chain Data: Accumulation in Progress
Recent on-chain activity supports the theory of strategic accumulation rather than panic selling.
According to Santiment, the number of wallets holding between 100 and 10,000 ETH has increased by nearly 1.8% in the past two weeks, a sign that medium and large investors are using the dip to grow positions.
Meanwhile, data from CryptoQuant shows exchange reserves for Ethereum at their lowest point since 2018, signaling a supply squeeze. When fewer tokens are available on exchanges, upward price pressure typically follows as demand builds.
At the same time, Ethereum’s network gas fees have remained moderate, around 20–30 gwei, keeping user activity stable without excessive congestion. This balance between healthy usage and controlled costs reflects an ecosystem that’s expanding sustainably.
Institutional Flows Add to Bullish Case
Institutional appetite for Ethereum exposure is also quietly growing again.
According to CoinShares’ latest report, ETH-focused investment products recorded $43 million in weekly inflows, the highest since May.
This uptick coincides with renewed optimism around the potential approval of spot Ethereum ETFs in the U.S. a development that many believe could trigger a wave of institutional participation similar to Bitcoin’s surge earlier this year.
“Once ETH ETFs go live, we could see billions of dollars in inflows within the first few months,” said James Butterfill, head of research at CoinShares. “That would fundamentally alter liquidity dynamics for Ethereum.”
If ETF approval aligns with the current consolidation phase, analysts argue that ETH’s next leg up could be explosive.
Traders Eye the $10,000 Milestone
Despite the recent drop, bullish traders remain confident that Ethereum’s long-term trajectory still points toward five-digit territory.
Crypto strategist Credible Crypto noted that Ethereum’s current structure resembles the pre-breakout accumulation pattern seen in 2020, before ETH’s surge from $400 to $4,800 in less than a year.
“If history rhymes, Ethereum could easily revisit that 2020-style expansion,” he said on X. “A sustained break above $4,000 sets the stage for $7K–$10K within the next cycle leg.”
Some even see the path to $10,000 as mathematically achievable based on network value models. Using Metcalfe’s Law, analysts estimate that Ethereum’s user and transaction growth could justify a market capitalization of $1.2 trillion, implying a price near $9,800.
Macro Headwinds Remain
Not everyone is ready to declare the bottom, however.
Broader macroeconomic conditions, including U.S. interest rate uncertainty, global inflation, and risk-off sentiment, could continue to weigh on crypto assets through the end of Q4.
“Ethereum’s fundamentals are strong, but macro still rules the game,” said Rachel Lin, CEO of SynFutures. “If yields rise again or equities wobble, ETH may struggle to sustain a breakout in the near term.”
The U.S. dollar index (DXY), often inversely correlated with crypto, has also shown signs of strength, putting additional pressure on risk assets. A reversal in DXY or a dovish Fed stance could act as a catalyst for ETH’s next surge.
DeFi and Layer-2 Growth Add Long-Term Strength
Beyond price speculation, Ethereum’s real-world usage continues to expand, especially across DeFi, NFTs, and Layer-2 ecosystems.
Layer-2 TVL (total value locked) has surpassed $40 billion, led by Arbitrum, Optimism, and Base.
Decentralized exchange (DEX) volumes remain steady, indicating consistent user engagement.
The upcoming EIP-7594 (“Pectra” upgrade) aims to improve validator efficiency and reduce staking risks, adding further bullish momentum for long-term holders.
“Ethereum’s innovation cycle hasn’t slowed,” said Hasu, strategy lead at Flashbots. “While traders focus on charts, developers are quietly building the foundation for ETH’s next exponential wave.”
Sentiment: Fear, Greed, and Patience
The Crypto Fear & Greed Index currently sits at 54, indicating neutral sentiment, a balanced zone that often precedes larger market moves. Social media metrics show declining hype but growing long-term conviction among Ethereum holders.
In fact, Google search trends for “buy Ethereum” have increased by 22% month-over-month, suggesting retail investors are preparing for reentry at lower levels.
The combination of muted short-term enthusiasm and strong fundamental conviction is typically the hallmark of early-stage bull market consolidation, something traders interpret as a positive sign.
What Could Trigger the Next ETH Rally
Several catalysts could reignite Ethereum’s momentum in the coming weeks:
Spot Ethereum ETF Approval: The single most important near-term driver.
Bitcoin Strength Recovery: ETH historically follows BTC rallies with higher beta.
Macro Relief: Any dovish signal from the Federal Reserve or cooling inflation data.
Network Upgrades: Pectra’s rollout and scaling improvements could renew investor confidence.
On-Chain Supply Crunch: Continued exchange outflows tightening available liquidity.
If two or more of these align, a breakout above $4,000–$4,200 could accelerate toward $5,000, marking the start of Ethereum’s next parabolic phase.
Historical Cycles Suggest Patience Pays
Looking back, Ethereum has followed a consistent macro pattern in each bull market:
2017: ETH rose from $10 to $1,400 before correcting 90%.
2021: ETH climbed from $90 to $4,800, then dropped 75%.
2024–2025: ETH has so far increased from $1,500 to $4,000, with potential room for further upside if historical ratios repeat.
If Ethereum were to mirror the magnitude of its 2021 cycle, analysts project an upper bound near $9,500–$10,000, aligning with current bullish models.
Investor Takeaway: Accumulate, Don’t Panic
Ethereum’s recent 8% pullback has rattled traders, but the bigger picture remains intact.
On-chain metrics point to accumulation.
Institutional flows are turning positive.
Network activity continues to strengthen.
Corrections like these are often viewed as opportunities rather than red flags. The current consolidation may be exactly what’s needed before Ethereum’s next major impulse move.
“This is not the end it’s the prelude,” summarized trader Rekt Capital. “Ethereum is compressing before expansion. $10K is not a fantasy. It’s just a matter of when.”
Key Takeaways
Ethereum dropped 8%, triggering over $120 million in long liquidations.
Analysts see this as a healthy reset, not a bearish reversal.
On-chain data shows accumulation and exchange outflows increasing.
Institutional inflows and ETF optimism could act as major catalysts.
Long-term models still point toward a potential $10,000 ETH in the next expansion phase.