Ethereum's Worst October in 8 Years: More Pain Looming?

Ethereum Faces Steep October Decline, Analysts Divided on Future Trajectory

September proved to be a strong month for Ethereum, the second-largest cryptocurrency, with gains nearing 9%. Expectations were high that this positive momentum would carry into October. However, the current month, historically a period of bullish performance for the asset, has so far fallen short, with ETH experiencing a significant plunge of approximately 13%.

Some analysts suggest that Ethereum could face further declines in the short term, a view seemingly supported by a noticeable dip in institutional interest. Historically, Ethereum has averaged a 4.14% return in October. This year, however, the cryptocurrency is on track to become a rare exception, potentially closing the month in negative territory and breaking a streak of four consecutive months of gains.

As of this report, ETH is trading around $2,330, according to CoinGecko, marking a 4.3% decrease over the past week. Alaoui Capital, an analysis firm, believes the cryptocurrency is approaching a critical “make-or-break zone.” They warn of a potential drop below the psychologically significant $2,000 level, with support expected in the $1,850-$1,920 range.

“If the price enters this zone and faces strong rejection, we could witness a relief bounce that catches bears off guard,” an X user associated with Alaoui Capital commented. “Everyone is focused on the downside, but what if ETH stages a reversal when no one expects it?”

Another analyst, Ted, also anticipates a short-term decline, though he views it as relatively modest. He pointed out that ETH has closed another weekly candle below $2,400 and that a failure to reclaim $2,350 “soon” could lead to a drop to $2,200.

Diminishing institutional demand is a growing concern. Spot ETH Exchange-Traded Funds (ETFs) have seen significant outflows recently, with an additional $220 million exiting these funds last week. This trend indicates that pension funds, hedge funds, and other conservative investors are reducing their exposure to Ethereum. Consequently, issuers like BlackRock, Grayscale, and Fidelity are compelled to sell ETH to meet redemption requests. If this pattern persists, it could impede a potential recovery for the cryptocurrency.

Adding to the cautious sentiment, Arthur Hayes, co-founder of BitMEX, recently divested over $15 million worth of ETH and reduced his holdings in several other altcoins, including Ethena (ENA) and Uniswap (UNI). This move is particularly noteworthy given Hayes’ earlier prediction that Ethereum could reach $10,000 by the end of 2026.

Joep Gerla offered a different perspective, suggesting that ETH might trade within a “manipulation area,” potentially experiencing further price declines. However, he believes that following this phase, the cryptocurrency will enter a distribution zone and could rally to as high as $3,600.

Meanwhile, X user Wealthmanaged expressed a more bullish outlook, asserting that ETH is currently testing the lower boundary of a specific flag pattern. They anticipate a substantial bounce beyond $3,000 from this level.