Ethereum has continued its downward trajectory and is currently positioned within a significant multi-month demand block. As liquidity is being aggressively flushed both above and below the price, ETH is nearing a critical decision point. Here, we could witness either a relief rebound or a deeper capitulation into the lower demand zones. ETH has maintained its aggressive downward trajectory, retreating from the $3.5K–$3.6K supply zone and decisively breaking below both the 100-day and 200-day moving averages. The asset has now positioned itself within the $2.7K–$2.85K demand zone, a region that previously served as the launchpad for the breakout in July. The daily market structure continues to exhibit a strong bearish trend, characterized by a distinct pattern of lower highs and lower lows. The descending channel, along with the unsuccessful retest of the 200-day MA, indicates that sellers remain firmly in control.
The present area near $2.7K marks the last point of accumulation prior to the rally in August. A clear loss of this area would reveal the next significant decision level at $2.45K–$2.55K, where long-term bids have previously entered the market. Conversely, a lasting recovery hinges on reclaiming the $3K level and closing above the 100-day MA, which would indicate a significant shift in momentum. The 4-hour timeframe showcases the accuracy of the downtrend. The asset remains in line with the descending trendline that began from the $4.2K breakdown, with each retest of this trendline triggering fresh waves of selling pressure. ETH has now hit the lower boundary of the descending channel, currently positioned within the $2.7K demand block.
Recent short-term liquidity sweeps have been observed on either side of the range, signaling heightened volatility and the possibility of establishing a local bottom. If buyers manage to uphold the current channel low, the initial upside target shifts to the $3.05K–$3.15K imbalance zone, subsequently leading to a more critical examination of the $3.45K supply region. Without a definitive breakout above the trendline, any rebound is more inclined to be corrective instead of structural. The two-week liquidation heatmap indicates that ETH is encircled by significant liquidation clusters above its current price, especially in the range of $3.1K to $3.6K. The zones indicate significant buildup of short positions and compelled liquidations amid the recent decline.
Historically, when the price dips into a significant liquidity vacuum beneath major clusters, markets frequently experience an overshoot to the downside before initiating a volatile rebound, as liquidity above the price emerges as the next target. At present, there are evident liquidity voids positioned above $3.2K, aligning with the significant daily fair value gap. These zones often serve as magnets during swift market corrections. As liquidity tightens beneath and significant unfilled areas loom overhead, ETH is nearing a critical threshold. A temporary capitulation into the lower demand region is a possibility, yet this same movement has historically set the stage for robust recovery phases once the exhausted sellers have been cleared out.