Ethereum [ETH] dipped to $4,000 on the 19th of August, and while some traders panicked, Wall Street veteran Tom Lee didn’t flinch. Instead, he suggested the pullback could be exactly what the doctor ordered.
“Ethereum is undergoing a minor correction. Pullback to $4,075-$4,150 by midweek. Pullbacks are healthy.”
Lee believes this correction could set the stage for a surge toward $5,100, drawing on Elliot Wave analysis to back the call. At press time, ETH had already rebounded off the $4K level—a key resistance in 2024 that may now turn into solid support if the bulls hold the line.
Big Players Stack Their Longs
The correction hasn’t scared off top traders. In fact, data from CoinGlass shows that elite Binance traders boosted their long positions from 75% to nearly 80% over the past three days. That’s a bold move, signaling confidence that ETH is setting up for higher levels rather than bracing for another tumble.
This aligns with the growing chorus of bullish projections, including FundStrat’s Mark Newton, who agrees the $4K–$4.15K pullback zone is nothing more than a pit stop before new highs.
Ethereum Exchange Pressure Falls Off a Cliff
On-chain activity is also flashing green. Exchange reserves for ETH have plunged to their lowest levels of the year. Translation? Investors are yanking coins off exchanges and moving them into cold wallets or validator setups. Less ETH on exchanges typically means less immediate sell pressure—a bullish setup in disguise.
Interestingly, even as spot markets cooled, CME Futures Open Interest (OI) hit a record $8 billion. Hedge funds have been flocking to ETH, lured by an attractive basis trade averaging above 10%, compared to Bitcoin’s 7–9%. For sophisticated players, ETH has simply offered juicier returns this month.
The U.S. Investor Puzzle
Still, there’s one piece missing: U.S. demand. The Coinbase Premium Index, which tracks American appetite for ETH, has slumped in recent days. Without renewed buying interest from U.S. institutions and retail traders, the rally to $5K could stall halfway up the mountain.
That said, if the metric flips back into positive territory, Lee’s prediction of a swift run to $5,100 might not be far off. For now, ETH traders are watching closely—because demand recovering in the U.S. could be the spark that lights the fuse.
The Road Ahead For Ethereum
Ethereum may have dropped under pressure, but the bigger picture still leans bullish. With exchange reserves at yearly lows, hedge funds exploiting lucrative futures spreads, and whales doubling down on longs, the setup is hard to ignore.
The question is simple: will $4K become the springboard that catapults ETH to $5.1K? Or will weak U.S. demand weigh it down just as momentum builds?
Either way, ETH’s story is far from boring—and traders wouldn’t want it any other way.
