Ethereum (ETH) is once again in the spotlight after its price surged to a 7-month high of $3,745, bringing it within striking distance of the key psychological barrier at $4,000. This surge reflects strong investor confidence, aggressive accumulation, and broader optimism in the crypto market. However, as history shows, such levels often attract profit-taking, raising the possibility of a short-term correction.
Ethereum Climbs 27% in a Week
Over the past week, Ethereum has gained nearly 27%, marking one of its most impressive rallies in recent months. This price jump is fueled by rising demand and reduced supply on exchanges as investors continue to withdraw ETH into cold storage, expecting further gains.
On-chain data reveals that over 317,000 ETH, worth approximately $1.18 billion, has been pulled from crypto exchanges this month. This sharp drop in ETH reserves across trading platforms typically signals bullish sentiment, as investors choose to hold rather than sell.
This kind of aggressive accumulation suggests a high level of confidence in Ethereum’s future price performance, especially with $4,000 acting as a major milestone.
The Importance of the $4,000 Psychological Barrier
While the current rally has brought Ethereum close to $4,000, this level represents a significant psychological resistance. In previous cycles, $4,000 has triggered selloffs as traders rush to secure profits.
The Net Unrealized Profit/Loss (NUPL) indicator—used to gauge investor sentiment—shows ETH entering the “Belief-Denial” zone. This area often marks a turning point where enthusiasm can quickly turn to caution, leading to price corrections.
Whenever Ethereum has entered this zone in the past, it has typically seen short-term pullbacks. If this pattern repeats, the $4,000 resistance could become a ceiling that halts further gains, at least temporarily.
What Happens If Profit-Taking Begins?
If Ethereum fails to break past $4,000, it could trigger a wave of selling from traders looking to cash in on recent gains. In this case, ETH may first fall to its immediate support at $3,530. A drop below this level could lead to a deeper correction down to $3,131, erasing a large portion of July’s gains.
Such a move wouldn’t necessarily mean the bull run is over but could indicate a cooling-off period before another leg up. It’s also worth noting that Ethereum has faced multiple such corrections in past bull markets, only to bounce back stronger.
A Breakout Could Take ETH to New Highs
On the other hand, if demand continues to outpace supply and accumulation stays strong, Ethereum could break cleanly above $4,000. This would likely trigger more buying as investors interpret the move as a confirmation of an ongoing uptrend.
In this scenario, Ethereum may enter price discovery territory, with the potential to set new 2025 highs. A successful breakout could even bring Ethereum closer to its all-time high of around $4,900 set in 2021, especially if broader market conditions remain favorable.
What’s Fueling Ethereum’s Momentum?
Several factors are driving Ethereum’s current price strength:
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Institutional Interest: With Ethereum spot ETFs gaining momentum, institutional investors are showing growing interest in ETH.
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Supply Reduction: The shift to proof-of-stake and reduced ETH issuance have created a deflationary effect, limiting supply.
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Market Recovery: Broader recovery in the crypto market is boosting altcoin performance, with Ethereum leading the charge.
These trends suggest that Ethereum isn’t just riding a short-term wave but is benefiting from more sustainable growth drivers.
Final Thoughts
Ethereum is currently in a critical phase, trading just below a major resistance level. Whether it breaks through $4,000 or faces a short-term pullback will likely depend on how investors react in the coming days.
If profit-taking dominates, ETH could slide to key support levels. But if the accumulation trend continues and broader market sentiment remains positive, Ethereum could be poised for further gains.
For now, all eyes are on the $4,000 mark, which will determine Ethereum’s next major move in this ongoing rally.
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