Ethereum Slips Below $3,700: Why the $3,400 Level Could Be Crucial
Ethereum (ETH) has plunged below the psychologically and technically important $3,700 mark, intensifying bearish sentiment in the market. Despite selective whale accumulation suggesting some long-term confidence, the overall trajectory of the asset points toward continued selling pressure. With Ethereum falling 5.5% in just 24 hours, investors are now eyeing the $3,400 support zone as the next major level to watch.
While one group of Ethereum whales — those holding between 10,000 and 100,000 ETH — has steadily increased their holdings since July, this alone hasn’t been sufficient to stop the broader downtrend. The number of wallets in this category rose from 1,018 to 1,352, with their collective holdings climbing from 17.24% to 19.58% of the total ETH supply. This behavior highlights their long-term bullish stance, but it’s only one part of the broader market picture.
The sell-off below $3,700 reflects broader weakness and a lack of conviction among other market participants. Many Ethereum holders, across wallet sizes, have been reducing their exposure. Metrics from Santiment reveal a declining number of wallets across the board, further confirming that the recent market activity has been dominated by distribution rather than accumulation.
Adding to the bearish outlook, Ethereum’s price chart on the daily timeframe shows a potential imbalance forming between $3,839 and $3,654. If this gap remains unfilled, it could indicate that buyers are running out of steam. The On-Balance Volume (OBV) has also been trending downward consistently, signaling persistent sell-side pressure. Moreover, the Relative Strength Index (RSI) continues to point toward bearish momentum, reinforcing the idea that the asset could decline further in the near term.
The next immediate support area lies at $3,400, with a more significant level potentially forming around $2,900 if the downtrend accelerates. These zones will be closely monitored by traders and analysts alike, as any failure to hold could trigger a deeper correction.
Interestingly, the digital asset treasury narrative that once fueled optimism for Ethereum earlier in the year appears to be losing steam. Institutional players like BitMine Immersion (BMNR), who had previously accumulated ETH, have seen their share prices decline despite their bullish ETH positions. This divergence between institutional ETH accumulation and market performance highlights the risks of relying solely on on-chain accumulation data for short-term predictions.
Another factor weighing on Ethereum is its relative underperformance compared to Bitcoin. While Bitcoin continues to attract investor interest, ETH’s weaker price action has opened the door for traders to short Ethereum as a hedge or as a directional play. This strategy has grown in popularity recently, particularly among Bitcoin bulls who see Ethereum’s weakness as an opportunity.
Recent spot market data from CryptoQuant shows increased activity from large orders, but these don’t necessarily indicate a market bottom. Similar whale activity was observed in April and July, both of which were followed by further price declines. In the past month, only one whale cohort has shown consistent buying behavior, while other large players appear to be selling into strength.
Given these factors, traders should proceed with caution. The loss of the $3,700 support region on November 2 signaled a critical shift in market dynamics. With bearish momentum gaining strength, Ethereum could be entering a more prolonged correction phase unless a strong reversal is triggered by macro factors or renewed buying interest.
Looking ahead, several scenarios could unfold:
1. Rebound at $3,400: If Ethereum finds support near $3,400, it could set the stage for a short-term bounce. However, such a move would need to be backed by volume and broader market sentiment to confirm a real reversal.
2. Breakdown to $2,900: If selling pressure continues and $3,400 fails to hold, Ethereum could revisit the $2,900 zone — a level not seen in several months. This would mark a substantial decline from recent highs and potentially shake investor confidence further.
3. Consolidation Phase: Alternatively, ETH may enter a range-bound phase between $3,400 and $3,700 as the market stabilizes and awaits new catalysts.
4. Impact of Broader Market Trends: Macroeconomic factors, such as Federal Reserve decisions or changes in crypto regulation, could significantly impact Ethereum’s direction. A dovish monetary policy could reignite investor appetite for risk assets, while regulatory uncertainty may do the opposite.
5. Layer 2 Developments and Network Activity: Ethereum’s long-term fundamentals remain strong, especially with the ongoing development of Layer 2 scaling solutions. Increased activity on Arbitrum, Optimism, and Base networks could eventually translate into renewed demand for ETH, but these factors may take time to influence price.
6. ETH/BTC Ratio as a Sentiment Indicator: Monitoring the ETH/BTC trading pair can offer insights into market sentiment. A weakening ETH/BTC ratio suggests capital rotation into Bitcoin, while a reversal might indicate renewed interest in Ethereum.
7. Institutional Inflows and ETF Speculation: If speculation around a potential Ethereum ETF gains traction, it could provide a much-needed boost to ETH prices. For now, however, institutional flows remain cautious.
8. Developer Activity and Ecosystem Growth: Despite price fluctuations, Ethereum continues to lead in terms of developer activity and decentralized application usage. Sustained growth in these areas may support ETH’s long-term valuation, even if short-term price action remains volatile.
In conclusion, while some Ethereum whales are increasing their holdings, broader market indicators suggest caution. The breach of the $3,700 level is significant, and unless Ethereum can reclaim this support quickly, further downside toward $3,400 and possibly $2,900 remains likely. Traders and investors alike should monitor key technical levels and be prepared for heightened volatility in the days to come.