Ethereum Rebounds to $2.9K But Bearish Risks Remain

According to technical analysis by Shayan featured on CryptoPotato, Ethereum’s daily timeframe shows the cryptocurrency currently trading around $2,900 after successfully bouncing off the critical $2,500 demand zone. This level held as strong support, triggering a short-term rally that has now brought ETH into a minor supply zone near $3,000. The Relative Strength Index (RSI) has moved off oversold levels and now sits near 36, indicating some cooling in bearish momentum but still reflecting overall market weakness.

The price remains well below both the 200-day (yellow) and 100-day (blue) moving averages, which are acting as dynamic resistance levels. For Ethereum to shift its structure back to bullish, technical analysis suggests ETH needs to reclaim the $3,500 area and consolidate above it. Until this occurs, any upside moves are considered corrective rather than indicative of a true trend reversal. A failure to maintain current levels could result in another drop toward $2,500 or even the critical $2,100 low, highlighting the precarious nature of the current recovery.

On the 4-hour chart, Ethereum has formed a bearish flag pattern just below the $3,000 resistance level, a technical formation that often signals potential downside upon breakdown. The ETH price has been unable to break above the key supply zone at $3,000 and is now showing signs of stalling, with the RSI hovering near the 50 level. This technical setup suggests that the recent bounce may be losing momentum at a critical juncture.

If this bearish flag breaks down, the immediate downside target becomes the $2,600–$2,500 demand area, potentially erasing recent gains. Conversely, a breakout above $3,000 with strong volume could invalidate the flag pattern and open the door toward $3,500. However, given the confluence of resistance levels identified in the technical analysis, buyers need to exercise caution and avoid chasing long positions into major resistance zones. The current technical structure emphasizes the importance of the $3,000 level as a make-or-break point for Ethereum’s near-term direction.

Broader market sentiment and futures data reveal significant changes in trader positioning. Open interest on Ethereum has dropped substantially over the past week, now sitting near $16.9 billion according to the analysis. This cooling in open interest, alongside lower funding rates, suggests a decline in speculative positioning, indicating that the market is transitioning to a more neutral state after a wave of forced liquidations.

The drop in open interest aligns with the recent price recovery, which was not heavily supported by leverage—typically considered a healthier type of bounce. However, the fact that open interest has not picked back up yet indicates hesitation from market participants and a lack of conviction in this move. Until both open interest and price start climbing in tandem, the bias remains cautious, with many traders likely sidelined or de-risking ahead of key resistance levels. This sentiment data from CryptoPotato’s analysis underscores the fragile nature of Ethereum’s current recovery and the need for confirmation from both price action and market participation.