Ethereum Rally Hinges on $4,200 Support to Fuel Breakout
Ethereum is trading above a critical support zone at $4,200–$4,356. Holding this level will preserve the bullish structure of its August rally. On-chain metrics show 1.87 million daily transactions and falling exchange balances, signaling renewed accumulation. A reported institutional sale of 59.6 million ETH by a BlackRock manager created temporary pressure, but buyers quickly absorbed the supply. Derivatives markets reveal elevated short interest between $4,800 and $4,872, increasing short-squeeze potential. Traders should monitor open interest, funding rates, and net flows across exchanges. A sustained move above $4,800 could target $5,500, while a break below $4,200 raises the risk of a deeper correction toward prior lows.
Bullish
Ethereum’s ability to hold the $4,200–$4,356 support zone underpins the current bullish momentum. Historical instances, such as the absorption of major institutional sell-offs in early 2025, led to sustained rallies once on-chain accumulation resumed. The tight open interest around $4,800–$4,872 creates short-squeeze potential. Combined with high daily transactions and falling exchange balances, this suggests buyers are willing to re-enter. In the short term, a successful defense of support and rising funding rates could drive a quick move toward $4,800 and beyond. Over the long term, continued institutional flows and derivative positioning reinforce a bullish outlook, provided key support holds.