Ethereum’s Critical Support Breakdown: Is a 10% Correction Imminent?

Ethereum’s price has entered a pivotal juncture, testing the Tom Lee trendline and critical support levels near $4,300. Analysts warn that a breakdown below this threshold could trigger a 10% correction, exacerbated by September’s historical weakness for crypto markets [1]. However, technical indicators and institutional activity suggest a nuanced picture, blending caution with potential for a rebound.

Technical and Sentiment Signals

The Relative Strength Index (RSI) currently sits at 54.04, indicating a neutral-to-bullish setup, while the Ichimoku cloud remains bullish, favoring upward movement [2]. Open interest has contracted to $9 billion—a level historically associated with rebounds to $4,900—suggesting short-term overcrowding in bearish positions could reverse [1]. Yet, the Tom Lee trendline’s breakdown would invalidate the bullish case, potentially extending the decline to $3,900–$3,700, a range where historical accumulation zones and institutional buying have previously stabilized the price [1].

September’s seasonal weakness adds urgency. Historically, crypto markets face downward pressure during this period, compounding risks if Ethereum fails to defend $4,300 [1]. A drop below $3,700 could then test the $3,100–$3,300 range, where prior corrections saw significant on-chain accumulation and ETF inflows [2].

Institutional Confidence and On-Chain Metrics

Institutional activity provides a counterbalance to bearish signals. BitMine Immersion Technologies recently added 4,871 ETH to its treasury, boosting holdings to 1.72 million ETH ($7.65 billion), while BlackRock’s accelerated Ethereum exposure underscores growing institutional demand [1]. These moves align with Ethereum’s expanding role in stablecoins, DeFi, and real-world asset tokenization, which have attracted $12.1 billion in ETF and treasury inflows since 2024 [2].

On-chain metrics further support resilience. Ethereum’s circulating supply remains in a deflationary phase, and transaction volumes near all-time highs suggest sustained utility [2]. However, derivatives overheating and regulatory uncertainties could amplify volatility if the $4,300 level fails [2].

Is This a Buying Opportunity or a Red Flag?

The $3,900–$3,700 range represents a critical inflection point. Historical data shows that dips into this zone often trigger stop hunts and reversals, particularly when aligned with Fibonacci retracement levels [1]. For instance, in August 2025, 690,000 ETH accumulated near $4,260, signaling defensive positioning [3]. A successful retest of $3,900 could flush out weak hands and create liquidity for a recovery, while a breakdown to $3,700 might test the $3,100–$3,300 support, where prior corrections saw strategic accumulation [1].

Conclusion

Ethereum’s near-term trajectory hinges on its ability to defend $4,300. A breakdown would validate bearish concerns, but historical rebounds from similar open interest levels and institutional accumulation suggest a potential floor. For investors, the $3,900–$3,700 range offers a high-risk, high-reward scenario: a successful defense could reignite bullish momentum toward $5,100–$5,450, while a failure might signal a deeper correction. The interplay of technical resilience, institutional demand, and macroeconomic tailwinds—including the Fed’s dovish pivot—creates a complex landscape where caution and opportunism must be balanced.

**Source:[1] Ether breaks below 'Tom Lee' trendline: Is a 10% incoming? [2] Tom Lee Calls ETH Bottom 'In Next Few Hours' as BitMine ... [3] Ethereum Price Eyes $4260 Support Zone