Earlier today, Ethereum (ETH) slipped under the $4,000 mark for the first time since August 8, extending the sell-off that began two days ago and intensified when the sell-off hit hard yesterday. The drop comes down to a combination of broader market forces, structural pressures, and crypto-specific triggers.
According to a CryptoQuant Quicktake post by contributor Arab Chain, ETH’s slide is being driven by several overlapping factors. A stronger US dollar, along with the Federal Reserve’s cautious tone after its September rate cut, has dampened appetite for risk. At the same time, higher bond yields and the looming threat of a US government shutdown have pushed investors away from assets like crypto.
Leverage has also played a role. On September 22, over $500 million in ETH longs were liquidated in just 24 hours, forcing around $45 million in whale positions to be sold off. With thin weekend trading and shallow order books, ETH’s price swings grew even sharper. Institutions added to the pressure, turning to OTC redemptions after the Fed meeting to trim exposure.
From a technical angle, ETH failed to break past heavy resistance between $4,500 and $4,600. When the $4,200 support gave way, the momentum turned firmly bearish. Adding to the headwinds, regulatory uncertainty around MiCA in Europe and ongoing US legislation weighed on sentiment, while ETH ETFs saw $76 million in outflows.
On-chain factors didn’t help either. Validator exit queues have grown, staking inflows have slowed, and natural buy-side demand has weakened. Seasonal weakness and Bitcoin’s growing market dominance added to the pressure. As Arab Chain noted, the correction reflects macro and structural positioning more than any broken long-term thesis, but volatility could stick around until liquidity improves and regulators provide more clarity.
Still, not everyone is bearish. ETH’s CME futures open interest is nearing record levels, with some analysts targeting $6,800 by the end of 2025. Others argue that the growth in ETH contracts this year could fuel a run toward $5,000, while its shrinking liquid supply may help drive higher prices. Crypto commentator Ted Pillows even sees the expanding global M2 money supply as paving the way for $20,000 ETH.
At the time of writing, ETH trades at $3,959, down 3.6% over the past 24 hours.
