Ether Breaks Below ‘Tom Lee’ Trendline: Is a 10% Drop Coming? 😱

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Key Takeaways:

  • Ether slipped under $4,300 after failing to maintain momentum above $4,700, with $338 million in liquidations adding more fuel to the fire.

  • Experts are eyeing $4,300 as a critical support level, but hey, September’s track record of disappointment raises the chance of a 10% dip. 🧐

  • Open interest and negative funding rates suggest long positions are getting flushed out, but if demand returns, a quick rebound could surprise everyone. 🎯

Ether (ETH) couldn’t hold its ground above the $4,700 resistance this week. Instead, it tumbled back under the $4,300 mark on Friday, breaching a crucial ascending trendline-one made famous by Fundstrat’s own Tom Lee. Guess what? It’s not looking too good.

Let’s face it, the market liquidity is thinner than your favorite cheap coffee, and the $338 million liquidation of Ether futures between August 22 and 23 isn’t exactly helping the situation. All of this points to the possibility of a deeper correction as we roll into September.

Lee and Fundstrat’s Mark Newton had marked $4,300 as a key floor on Tuesday, citing the RSI readings that looked “meh” and an Ichimoku cloud structure that still had some bullish hope. But come on, with September’s history of dragging its feet, is it time to brace for a drop?

In fact, CoinGlass data reveals that September has historically been Ether’s kryptonite, with a median return of -12.55%. That’s not exactly the best news if you were hoping for a “moon” shot. If Ether loses the $4,300 support, well… let’s just say a 10% drop isn’t out of the question. 😬

The Curious Case of Rising Divergence in Ether Open Interest

Futures positioning is starting to look… well, nervous. According to analyst Amr Taha, the daily change in Ether’s open interest (OI) has registered a “higher low” compared to its last dip, but absolute OI on Binance has fallen to a “lower low.” What does this mean? Basically, retail traders are bailing out of long positions rather than jumping into new ones. A bit like running for cover when it starts raining crypto. 🌧️

The total ETH open interest has shrunk to around $9 billion. Funny thing is, the last time this happened, ETH shot up to $4,900. Could history repeat itself, or are we just in for a wild ride down? Only time will tell.

Meanwhile, funding rates across exchanges have turned negative, meaning shorts are dominating the market. The combination of shrinking open interest and negative funding rates is a clear sign that longs are being flushed out, not initiated. Classic short squeeze setup? Maybe. 🙃

But here’s the thing: such conditions often set the stage for sharp reversals. Negative funding rates can indicate overcrowded short positions that are just begging for a surprise bullish rebound. If demand steps in, don’t be shocked if Ether rockets again. Or, you know, not. 🤷‍♂️

Technically, the charts don’t look great heading into the month’s close. Historically, September has a knack for bringing corrections, so the chances of a 10% drop from current levels in the first week are pretty high.

The first support to keep an eye on is around $4,180, but let’s be real-expecting a strong rebound from here seems like wishing for a miracle. The real action might happen below $4,000, with the $3,900-$3,700 zone looking like the next potential “buy me” area. 🛒

If that zone fails, then brace yourself. Next up: the $3,100-$3,300 range, which could be a crucial turning point for a broader bull market continuation. Or, you know, the start of a longer, sadder decline. We’ll see.

A breakdown below those levels could mean more than just a little hiccup-it could spell the end of Ether’s bullish run. But hey, this is crypto. Anything can happen. Or nothing. Whatever. 😏

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2025-08-30 00:10