Key takeaways:

• Ethereum failed to break above $4,800 and the bearish divergence led to a 3% correction.

• Spot selling pressure has increased, but leveraged traders remain lively.

• A rebound from $4,400 could reset the bullish momentum towards up-to-date highs.

On Monday, as Bitcoin (BTC) surged to a up-to-date record high, Ether (ETH) failed to clear the resistance at $4,800, causing a acute 3% correction below $4,500 on Tuesday. The price decline occurred as a result of a bearish divergence on the four-hour chart. This usually means that buyers are losing strength, often preceding local tops or short-term reversals.

ETH retested the $4,500 level, with supply chain and derivatives data showing mixed signals. While the cumulative spot volume delta (CVD) declined sharply, indicating net selling pressure in the spot market, futures open interest and futures CVD remained elevated. This suggested that leveraged traders are still lively and setting themselves up for volatility, even as spot buyers make profits.

Such conditions often attract lateral participants who expect inputs based on fluidity rather than impulsive movements. A potential boost in liquidity around $4,400, where stop orders are typically clustered, could serve as a short-term reset. A sturdy rebound from this zone would invalidate the bearish pattern and signal a renewed bullish continuation this week.

However, if ETH fails to defend this region, the correction could reach $4,250 to $4,100, where both the four-hour and one-day order blocks converge. These overlapping zones often represent areas of high demand where gigantic buy-side orders have previously been concentrated, making them key levels for a potential trend reversal.

Related: XRP Sees Highest ‘Retail FUD’ Since Trump Tariffs: Will There Be a Massive Selloff Next?

The “liquidity lag” for ether may be decreasing

According to XWIN Research, the U.S. M2 money supply, a measure of the economy’s liquidity, rose to a record $22.2 trillion. While Bitcoin has surged over 130% since 2022 in response to this wave of liquidity, Ether remains at just 15%, highlighting the “liquidity lag.”

However, several onchain metrics suggest Ether can catch up. Foreign exchange reserves fell to approximately 16.1 million ETH, a decline of over 25% from 2022, reflecting the continued decline in selling pressure. Net exchange flows remain negative, indicating that ETH is shifting towards self-custody and staking, reducing available supply.

Cryptocurrency trader Skew excellent that the recent rally represented a “fourth touch” of the $4,700-$4,800 zone. If ETH manages to hold this area, “that would be quite optimistic.” If not, a deeper pullback could create a higher low, potentially marking another leg up.

Related: Altcoin Prices Rise as USDT Dominance Wanes: Is this an “altseason”?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.