Earlier today, Ethereum (ETH) fell below the crucial $4,000 mark for the first time since August 8. This drop in ETH’s price is due to a combination of macroeconomic, structural, and specific crypto-related factors.
Ethereum Dips Below $4,000, Analyst Explains Why
A CryptoQuant Quicktake post by contributor Arab Chain attributes ETH’s latest drop below $4,000 to a mix of factors. Firstly, a strong US dollar, along with the Federal Reserve’s (Fed) cautious approach after its September rate cut, has suppressed risk appetite.
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Additionally, rising bond yields and fears of a potential US government shutdown have unsettled investors, prompting caution towards riskier assets, including cryptocurrencies like ETH.
Secondly, the analyst highlights the impact of leverage in ETH’s recent decline. On September 22, over $500 million in ETH long positions were liquidated in just 24 hours, leading to the unwind of significant leverage accumulated in Q2 2025. During this sell-off, ETH whales faced nearly $45 million in forced sales.
Moreover, low trading volumes over the weekend and thin order books exacerbated ETH’s price fluctuations. Institutional investors opted for OTC redemptions post-Fed meeting to lessen their exposure to ETH.
From a technical viewpoint, ETH struggled to break through the strong resistance near $4,500 – $4,600. Its inability to maintain the $4,200 support level worsened the situation, shifting the momentum firmly into bearish territory.
Furthermore, regulatory challenges surrounding digital assets, particularly the uncertainty around MiCA in the EU and U.S. crypto legislation, particularly impacted sentiment. ETH exchange-traded fund (ETF) outflows amounting to $76 million added further pressure.
Lastly, an increase in validator exit queues and reduced staking inflows diminished natural buy-side support. Alongside other factors like seasonal weaknesses and Bitcoin’s (BTC) rising market dominance, this contributed to the recent sell-off of ETH. Arab Chain concluded:
While this correction mirrors structural positioning and macro forces rather than a broken thesis, volatility may endure until liquidity improves and regulatory clarity is established.
Will ETH Stage A Recovery?
Though the momentum is currently against ETH, some analysts remain hopeful for a revival in ETH’s fortunes in the upcoming months. For example, ETH’s CME futures open interest is gradually approaching new highs, suggesting a potential price target of $6,800 by the end of 2025.
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Similarly, the increase in ETH contracts throughout the year has led some analysts to believe that this digital asset may soon embark on a rally towards $5,000. Additionally, ETH’s illiquid supply could further boost it to new heights.
In his latest analysis, crypto commentator Ted Pillows forecasted that the rise in global M2 money supply could lead to an ETH price of $20,000. At the time of writing, ETH is priced at $3,959, representing a 3.6% decline over the past 24 hours.
Featured image from Unsplash, chart and TradingView.com
