Ethereum Price Could Rally Beyond $5,000 Soon, But There’s a Catch

TLDR:

Ethereum price trades at $4,058 after a 3.98% daily gain, with traders eyeing recovery beyond $5,000.
Open interest in Ethereum futures dropped 45% from its peak, reducing market speculation pressure.
Technical analysts see a bullish setup if ETH reclaims $4,100 and holds it in the short term.
The MVRV Momentum death cross reappears, warning of potential correction before any major breakout.

Ethereum is back in focus as traders weigh whether its next move leads to a breakout or another pullback. The asset is holding near the $4,000 mark after weeks of choppy action, and market sentiment seems split. 

Some traders see the recent reset in leverage as a healthy sign, while others warn of a possible short-term correction. The tension is clear: bulls want a reclaim of key levels to confirm strength. The next few days could define whether Ethereum breaks higher or slips further.

Traders Watch Critical Levels as Ethereum Holds $4,000

Crypto analyst Daan Crypto Trades said Ethereum’s current setup looks technically sound. He explained that the retest of the 0.382 Fibonacci retracement level and the Daily 200EMA remains “healthy.” 

For him, the key lies in reclaiming $4,100, the previous cycle high. Holding that level, he added, could bring back bullish momentum and open the door for a new all-time high by year’s end.

Market data from CoinGecko at press time shows Ethereum trading at $4,058.40 with a daily trading volume of about $34 billion. 

The token has gained nearly 4% in 24 hours but remains down 2% for the week. These figures reflect a cautious recovery phase after recent liquidations wiped out excess leverage across the crypto market.

Trader Ted noted that Ethereum’s open interest has dropped by nearly 45% from its previous high, while price has only fallen by about 20%. 

He said this reset in speculation is constructive for a cleaner market rebound. If buying resumes from current levels, he projected a move toward $5,500 to $6,000 without overheating.

Market sentiment remains cautiously optimistic. Traders see the reduction in leveraged positions as a sign of more stable footing. However, technical signals suggest Ethereum still needs to prove it can sustain upward momentum.

Death Cross Reappears as On-Chain Data Turns Mixed

On-chain analyst Ali warned that the MVRV Momentum indicator has flashed a death cross, a pattern that last appeared before a steep drop from $3,300 to $1,400. He said the signal has returned, raising questions about the strength of the current rally.

The reappearance of this signal has left traders divided. 

Some view it as a temporary shakeout before a larger move higher, while others believe it hints at another leg down before recovery. The contrast between reduced leverage and bearish on-chain signals captures the current state of uncertainty.

Still, Ethereum’s broader setup looks resilient compared to earlier corrections. 

The token’s price holding near $4,000 suggests steady demand from both spot buyers and long-term holders. If it pushes back above $4,100 and maintains that level, analysts believe a strong year-end rally could follow.

Hence, the next directional move may depend on whether ETH attracts fresh momentum from these levels or stalls below resistance.