Ethereum drops below $2,100: Short-term correction or long-term opportunity? Key support level analysis

Ethereum price has once again fallen below the key psychological level of $2,100, touching recent lows during trading. This price level is not only an important technical support but also a watershed for market sentiment. The recent decline occurred against the backdrop of a broader market correction, with mainstream cryptocurrencies generally under pressure. However, on-chain data shows that despite short-term price pressures, Ethereum’s fundamental structure is undergoing profound changes, offering a different perspective for understanding the current market.

Market Status: Ethereum Breaks Key Support Level

Ethereum has recently shown weakness, breaking below the critical technical support level of $2,100. According to Gate data, as of the latest figures on February 5, Ethereum’s price is $2,094.57, down 6.32% in 24 hours, with a trading volume of $878.9M, a market cap of $253.2B, and a market share of 10.01%. This price movement is not isolated; Bitcoin has also come under pressure, falling near $71,000, and the entire crypto market is experiencing a broad correction.

From a technical perspective, the $2,100 level is a key test point for Ethereum’s VWAP (Volume Weighted Average Price) support derived from its cycle lows. Over the past week, Ethereum’s price has declined by 15.10%, erasing most of its early gains. Historically, Ethereum has found support within this VWAP range twice before, followed by rebounds, and the current price is testing this level again. The weekly chart shows that Ethereum is at a critical testing point, with very fragile price behavior.

Market Pressure: Multiple Factors Driving Price Correction

The current Ethereum correction is influenced by multiple factors, from macroeconomic conditions to industry regulation, creating compounded pressure.

First, traditional financial market stress has transmitted to the crypto market. Recent sell-offs in US stocks have intensified, with the Nasdaq closing down 1.5% on related trading days, and crypto-related stocks generally falling. This overall adjustment of risk assets naturally affects the highly volatile cryptocurrency sector.

Second, institutional-level pressure is evident. Public data shows that Tom Lee’s BitMine holds 4,285,125 ETH, with a current market value of about $8.42 billion. The fall in Ethereum’s price below $2,100 has resulted in unrealized losses exceeding $7 billion for this account. This institutional on-paper loss inevitably influences market sentiment.

Additionally, regulatory policy changes have increased market uncertainty. Recently, Buteo County in Liangshan Yi Autonomous Prefecture, Sichuan Province, China, issued a notice titled “Notice on Prohibiting Virtual Currency ‘Mining’ Activities,” explicitly stating that virtual currency “mining” activities are outdated production processes explicitly eliminated by the state.

The notice bans all forms of virtual currency “mining,” including but not limited to Bitcoin and Ethereum, and emphasizes that investing in virtual currencies and related derivatives is legally invalid.

Technical Analysis: Key Support and Potential Directions

From a technical standpoint, Ethereum is at a critical crossroads. The VWAP support at $2,100 has been broken, shifting market focus to the next potential support zone. If the $2,100 support is completely lost, previous price trends suggest the next significant target could be around $1,800, which could accelerate liquidations and further drag down the market.

Another important technical indicator is Ethereum’s 200-week moving average, which lies below the current price level. Historically, this long-term indicator has served as a strong support during corrections, making it a key level to watch.

Chart patterns also show bearish signals. After breaking near the $2,800 support level, Ethereum faces renewed selling pressure. Chart formations such as descending triangles and symmetrical triangles appear to point toward a lower target. The Relative Strength Index (RSI) has fallen from the 60s in early January to the 30s, indicating weakening upward momentum.

Long-term Fundamentals: Institutional Adoption and Supply Tightening

Despite short-term price pressures, Ethereum’s long-term fundamentals are undergoing positive changes. The most notable is the fundamental shift in supply structure.

Currently, Ethereum’s exchange reserves have fallen to historic lows, with only 8.7% of the total supply remaining on exchanges—down 43% since July last year. This supply tightening results from large-scale transfers of assets to staking protocols, Layer-2 networks, and long-term custody solutions, effectively removing them from immediate market circulation. This trend reflects strategic accumulation rather than speculative trading.

Meanwhile, institutional adoption is accelerating. Digital asset treasuries are increasing ETH holdings, with $1.8 billion flowing into US spot ETH ETFs just last week. SharpLink Gaming’s reserves have grown to 361,000 ETH, and BitMine’s Ethereum holdings surpassed $2 billion in just 16 days. This structural buying continues to compress Ethereum’s free float. Market analysts note, “We are witnessing the tightest supply conditions in Ethereum’s history.”

Market Views Comparison

In light of the current market situation, different institutions have provided varied analyses:

Citigroup recently updated its outlook for Ethereum, projecting a price of $4,300 by the end of the year under a baseline scenario, with a potential drop to $2,200 in a bear market, and an upside to $6,400 in a bull market.

Bernstein, in its latest report, states that the crypto market remains in a short-term bear cycle but expects a reversal within 2026 (or the first half). Tom Lee remains long-term optimistic, predicting Ethereum could reach $20,000 by 2026, driven by its expanding role in real-world asset tokenization and the entry of major financial institutions like BlackRock, JPMorgan, and Citigroup into the space.

Gate Data-Based Forecast

Based on Gate data, we have compiled long-term price forecasts from various analysis firms.

Ethereum Long-term Price Forecasts:

The table shows that despite short-term pressures, multiple institutions remain relatively optimistic about Ethereum’s long-term prospects. By 2031, Ethereum’s price is expected to range between $3,936.12 and $7,074.38, with an average of $5,319.08, representing a potential return of +153.00% compared to current levels.

Ethereum’s price has changed by -28.59% over the past week, -34.87% over the past month, and -23.22% over the past year.

On-chain data indicates that although Ethereum faces short-term challenges, its supply structure is undergoing fundamental change. Exchange reserves have fallen to historic lows, with large amounts of ETH flowing into staking and long-term holding sectors. Meanwhile, institutional adoption continues unabated, with digital asset treasuries and ETFs attracting ongoing capital inflows.

The market focus now is on the validity of the $2,100 support level. If this level holds, it could lay the foundation for a subsequent rebound; if it is broken, the market may need to test lower support zones. As analysts point out, the current crypto market is still in a short-term correction cycle but is expected to reverse within 2026.