Ethereum (ETH) Price Faces Short-Term Correction After Extended Bull Run

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has entered a short-term corrective phase following a prolonged bullish run. As of November 8, ETH is trading around $4,487, reflecting a 4% decline within the past 24 hours. Despite this pullback, the long-term outlook for Ethereum remains robust, though waning buying momentum signals a temporary market pause.

Profit-Taking and Fund Outflows Curb Gains

A key factor driving Ethereum's recent price decline is the uptick in profit-taking among short-term traders. Recent on-chain data reveals significant fund outflows from the cryptocurrency, including a single-day withdrawal of $225 million on October 7. This suggests investors are either taking profits or reallocating their capital into other assets.

Technical indicators further confirm this short-term dip in momentum. Metrics such as the Moving Average Convergence Divergence (MACD) and KDJ oscillators have shifted from overbought levels into bearish zones, indicating a cooling in demand. Moreover, Ethereum has faced repeated rejection at the $4,800 resistance level, forming bearish divergence patterns on short-term charts. These signals collectively point to a weakening of ETH's upward momentum.

Leverage in the Market Increases Downside Risk

The market's heavy reliance on leveraged long positions adds another layer of risk to Ethereum's current correction. Recent data shows over 70% of traders are holding leveraged long positions, an imbalance that heightens vulnerability to sharp declines. Even a modest increase in selling pressure has the potential to trigger a cascade of forced liquidations, exacerbating price drops.

The prevalence of overleveraging underscores the importance of a reduction in speculative activity for Ethereum to achieve more sustainable growth. Analysts warn that until these overleveraged positions diminish, Ethereum remains at risk of steep downward price movements during periods of higher volatility.

Institutional and Whale Activity Reflect Long-Term Optimism

Despite the pullback, Ethereum's long-term outlook remains strong, bolstered by ongoing accumulation among major holders and institutional investors. For example, prominent crypto whale BitMNR has expanded its Ethereum holdings to 2.83 million ETH, underscoring confidence in the asset's future potential.

Institutional interest continues to grow, supported by developments such as the U.S. Securities and Exchange Commission's (SEC) recent approval of Grayscale's Ethereum ETF. Similarly, Fidelity has been expanding its tokenized Ethereum fund, reflecting the sustained appetite for ETH among large-scale investors. Such moves indicate that market leaders are unfazed by short-term volatility and remain focused on Ethereum’s broader growth trajectory.

Critical Support Levels and Market Outlook

Ethereum’s immediate support zone resides between $4,250 and $4,400. A successful rebound from this range could reignite short-term buying momentum, potentially setting ETH up for a retest of the $4,700 level. Conversely, if the price fails to maintain support within this zone, the correction could deepen toward the $3,825 level.

Looking further out, Ethereum is expected to consolidate within the $5,500 to $6,650 range before establishing a clearer directional trend. Analysts suggest that clearing out the excessive leverage currently weighing on the market could pave the way for the next major rally.

While the short-term performance may appear uncertain, Ethereum's on-chain fundamentals and strong institutional demand remain intact. Experts view the current pullback as a constructive consolidation phase—a healthy process that could provide a launchpad for Ethereum's next significant uptick in value.