Ethereum has long been a cornerstone of the cryptocurrency ecosystem, second only to Bitcoin in market influence and adoption. But recent price action and technical indicators suggest growing bearish momentum. After breaking below a five-month consolidation pattern, Ethereum (ETH) is now facing increasing downward pressure. At the time of writing, ETH trades around $2,622 — down 4% in 24 hours — sparking renewed debate over whether a deeper correction is imminent.
Some analysts are warning of a potential drop to $1,652, citing technical breakdowns and weakening market sentiment. But what exactly is driving this bearish outlook? And could Ethereum truly fall that far? Let’s break down the key factors shaping the current narrative.
The Breakdown of a Key Consolidation Pattern
For five months, Ethereum held within a tight rectangular range, building anticipation for a breakout. However, on August 4, the price broke bearishly from this pattern, failing to sustain momentum above critical resistance at $2,933.
This level remains pivotal. Analyst Peter Brandt, known for his long-term technical approach, highlighted that the completion of the five-month rectangle signaled a shift in market structure — one that favors further downside.
👉 Discover how market patterns shape future price movements — and what’s next for Ethereum.
Despite a brief attempt to reclaim $2,933 on August 14, ETH failed to close above it. That same day, positive U.S. Consumer Price Index (CPI) data — typically favorable for risk assets — surprisingly triggered a sell-off across crypto markets. This “sell the news” reaction amplified bearish sentiment and weakened confidence in near-term recovery.
Technical Indicators Flash Red
Multiple technical indicators now point to deteriorating strength in Ethereum’s price action.
Chaikin Money Flow (CMF) Shows Selling Pressure
The CMF currently sits at -0.09, indicating net selling pressure over the past 21 days. More concerning is that the indicator has flattened after dipping, suggesting sustained lack of buying interest. When buyers hesitate to enter during pullbacks, it often precedes deeper corrections.
Bollinger Bands Signal Volatility Spike
Bollinger Bands have expanded significantly, reflecting rising volatility — typically seen during strong directional moves. In this case, ETH dropped sharply from the upper band to the lower band within 24 hours, a classic sign of a bearish reversal. Such rapid movement often precedes extended downside as momentum traders join the sell-off.
Key Support Levels in Focus
At present, $2,611** stands as a critical support level. If this level breaks, the next target becomes the **1.618 Fibonacci extension at $2,521. Below that, downside risks increase dramatically.
Additionally, the zone between $2,614 and $2,800 is densely populated with addresses that purchased ETH at those levels — meaning a large number of holders are currently “at the money.” Should sentiment worsen, many may choose to exit positions to avoid losses, adding further downward pressure.
Futures Market Reflects Growing Bearish Sentiment
Beyond spot price action, the derivatives market tells a telling story.
Low Long-to-Short Ratio
The current long-to-short ratio in Ethereum futures sits at 0.90, indicating more traders are holding short positions than long ones. This imbalance suggests waning confidence in upward price movement and increased hedging or speculative bets on further declines.
Declining Open Interest
Open Interest (OI) — the total value of outstanding futures contracts — has dropped by 3% in recent days. According to Coinglass data, OI has fallen steadily from over $14 billion** at the start of the month to around **$10 billion today.
A declining OI during a downtrend typically means traders are closing positions rather than doubling down — often a sign of capitulation or reduced conviction in recovery.
Could ETH Really Fall to $1,652?
Peter Brandt’s prediction of a drop to $1,652 may seem extreme, but it’s rooted in technical structure. He argues that after breaking down from the five-month rectangle, Ethereum could retrace to prior historical support levels consistent with long-term trend analysis.
This target aligns with deeper Fibonacci levels and previous congestion zones from earlier market cycles. While not guaranteed, such targets serve as reference points for where value might stabilize if selling pressure continues unchecked.
Importantly, Brandt notes that his bearish thesis would be invalidated if ETH closes above $2,961 — just above the failed resistance. Until then, the path of least resistance appears downward.
Frequently Asked Questions (FAQ)
Q: What caused the recent drop in Ethereum’s price?
A: The immediate trigger was a “sell the news” reaction following positive U.S. CPI data on August 14. However, underlying technical weakness — including a breakdown from a five-month pattern and weakening momentum — contributed significantly to the decline.
Q: Is $2,611 a strong support level for ETH?
A: Yes. $2,611 has acted as key support recently. A sustained break below this level could open the door to further losses toward $2,521 or lower.
Q: Why are analysts talking about $1,652 as a potential target?
A: This level comes from technical analysis based on long-term chart patterns and Fibonacci extensions. While not certain, it represents a deep retracement zone that could attract buyers if reached.
Q: How does open interest affect Ethereum’s price?
A: Falling open interest during a downtrend suggests traders are exiting positions rather than adding leverage. This can signal loss of confidence but may also indicate nearing the end of a correction.
Q: What would reverse the bearish outlook on ETH?
A: A decisive close above $2,961 would invalidate many bearish setups. Additionally, rising volume on up-moves and improving on-chain fundamentals could restore bullish momentum.
What This Means for Investors
While short-term indicators lean bearish, it's important to distinguish between price volatility and fundamental value. Ethereum remains central to decentralized finance (DeFi), NFTs, and smart contract platforms. Network upgrades like Dencun have reduced fees and improved scalability, strengthening its long-term utility.
However, macroeconomic factors — including interest rate expectations and risk appetite — continue to influence crypto markets. In risk-off environments, even strong projects like Ethereum can face broad selloffs.
Investors should monitor:
- Whether $2,611 holds as support
- Volume and momentum on any rebound attempts
- Derivatives data like funding rates and OI trends
- On-chain metrics such as exchange outflows and active addresses
Final Thoughts
Ethereum is at a crossroads. Technical patterns suggest further downside risk, with some analysts projecting drops toward $1,652. Bearish signals from CMF, Bollinger Bands, and futures positioning reinforce this view.
Yet history shows that sharp corrections often create opportunities for long-term holders. The key is recognizing when sentiment reaches extremes — and being prepared for both downside risk and potential rebound catalysts.
Whether you're trading or investing for the long haul, understanding these dynamics gives you an edge in navigating uncertain markets.