Ethereum Faces Potential Pullback as Price Struggles to Maintain $4K: Analyst Insights

Ethereum’s price may continue to face consolidation in the near term, with the cryptocurrency potentially remaining range-bound between two key psychological levels—$3,000 and $4,000. According to crypto analyst Rekt Capital, Ether’s struggle to hold above the $4,000 mark, combined with a recent 10% drop, suggests that a pullback to the lower $3,000s could still be in play.
Ethereum's Struggles with the $4,000 Resistance
In a market report on December 20, Rekt Capital noted that Ethereum has repeatedly failed to maintain its position above $4,000. While the price of Ether briefly surpassed the $4,000 mark multiple times over the past month, peaking at $4,077 on December 6, it has consistently struggled to sustain these levels.
According to data from CoinMarketCap, Ethereum’s price has seen resistance at this psychological threshold, making it difficult for Ether to establish a firm footing above $4,000. As a result, Rekt Capital suggests that Ethereum may remain trapped within a consolidation range between $3,000 and $4,000 in the short term.
The $3,000 Support Level and Potential Pullback
Rekt Capital highlighted $3,000 as a key psychological support level for Ethereum. The last time Ether traded around this level was on November 9, after which it rebounded above $3,000. Prior to that, Ethereum had been trading below the $3,000 level since early August.
While Ethereum currently trades at $3,466, Rekt Capital cautioned that the price could dip by more than 10% in the short term, potentially bringing it closer to the $3,000 support region. He also pointed out that if this happens, it could set the stage for the formation of an inverse head-and-shoulders pattern, a bullish reversal formation that could indicate a shift in trend direction.
Ethereum's Supply Dynamics and ETF Inflows
Despite the potential for a short-term pullback, analysts remain optimistic about Ethereum’s long-term prospects. One key factor is the decreasing supply of Ethereum on centralized exchanges. On December 17, Cointelegraph reported that data from on-chain market intelligence firm CryptoQuant showed Ethereum balances on exchanges had reached an 8.5-year low of 9.2 million ETH, marking a nearly 10% decrease in the past year.
This decline in exchange balances is seen as a positive indicator for Ethereum’s price, as reduced supply on exchanges may lead to upward price pressure. Additionally, the growth of Ethereum-based spot exchange-traded funds (ETFs) is also fueling optimism.
Spot Ethereum ETFs and Future Price Projections
Since the launch of spot Ethereum ETFs in the United States on July 23, the funds have raised approximately $2.43 billion, according to Farside data. Analysts expect this trend to continue into 2025, especially if regulators allow these ETFs to generate yields through staking, further enhancing their appeal to institutional investors.
Asset management firm VanEck has even forecasted that Ethereum’s spot price could reach $6,000 by the fourth quarter of 2025, signaling strong growth potential for Ether. While initial expectations for Ethereum’s performance following the launch of spot Ethereum ETFs were high, especially in comparison to the success of Bitcoin ETFs, early inflows have been weaker than anticipated. As a result, the likelihood of Ethereum surpassing its all-time high and reaching $5,000 by the end of the year has diminished.
Conclusion
Ethereum’s price is currently navigating a challenging range between $3,000 and $4,000, with the possibility of a pullback to the lower $3,000s in the short term. Despite these short-term fluctuations, long-term sentiment remains positive, driven by strong fundamentals such as declining exchange balances and the growing momentum of spot Ethereum ETFs. As Ether continues to face psychological resistance at $4,000, investors and analysts will be watching closely to see whether a bottom forms near the $3,000 support level, potentially setting the stage for a future bullish reversal.
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