Although recent on-chain upgrades have structurally reduced supply and enhanced Ethereum’s long-term narrative, the immediate question for market participants is whether momentum can resuscitate price action before technical damage becomes entrenched. The sharp sell-off in 2025, which triggered roughly $1.1 billion in liquidations, exposed a cohort of weak hands and reset short-term positioning, leaving ETH vulnerable as it fell beneath the psychologically and technically significant $3,400 level. That threshold, once support, now functions as resistance on rebounds, and the presence of an oversold RSI alone does not assure a meaningful reversal; momentum, defined by participation, volume, and follow-through buying, remains the critical arbiter between a tactical bounce and a durable recovery. Notably, over 303,000+ traders were liquidated in the 24-hour period surrounding the drop, highlighting the scale of forced selling. The ongoing token burn mechanism continues to exert a supply shock that may influence short-term volatility and price action.
Momentum — not just an oversold RSI — will determine whether ETH recovers or succumbs to entrenched technical damage.
Technically, a sustained hold above the $3,900–$4,000 base is necessary to restore constructive market structure, while failure to reclaim $3,400 with conviction would signal continued bearish continuation. Breakdown below key pivots around $4,200 risks cascading losses toward lower supports, and traders are watching resistance clusters near $4,260, $4,300, $4,400–$4,500, and $4,700–$4,750 for evidence that buyers can absorb selling pressure. Large liquidation events have historically preceded strong reversals when momentum returns, but that pattern requires coordinated accumulation and relative strength versus Bitcoin, which tends to correlate more tightly with ETH during episodes of market stress.
Fundamentally, Ethereum’s narrative is strengthened by post-Merge and Pectra dynamics that have made supply net deflationary, slashed issuance, doubled burn rates, and reduced annualized supply by roughly 332,000 ETH since the Merge, supporting the “ultrasound money” thesis when network usage is high. Institutional and whale activity offers mixed signals: concentrated accumulation—$2.6 billion in a single week—and JPMorgan’s acceptance of ETH as collateral indicate conviction, while ETF outflows and technical degradation can counteract those flows. Recent policy shifts and ETF activity have also driven flows that materially impacted price as investors rotated into ETH amid changing sentiment and product availability, highlighting growing institutional interest.
Macro cross-currents amplify risk; Bitcoin hovering near $100,000 creates a psychological anchor, and any breakdown there would likely spur altcoin outflows. Given divergent analyst models that range from conservative $7,709 targets to multi-thousand-dollar bull cases, disciplined risk management, strict stops, and attention to on-chain metrics remain essential. In short, Ethereum’s long-term fundamentals are resilient, but survival in the near term demands relentless momentum; stagnation risks technical collapse.
