Ethereum's $4,500 Support Test: Buying Opportunity or Precipice?

Coinbase analysts have identified Ethereum (ETH) as potentially entering a “buy the dip” zone, citing neutral options positioning, long-biased futures, and favorable valuation metrics. The firm notes that the six-month options skew is flattening, indicating reduced medium-term bearish demand, while open interest for ETH futures remains near record highs with positive funding rates that suggest a long-biased leverage regime. The MVRV Z-score, a measure of on-chain profitability, currently stands at ~2, below historical cycle peaks, reinforcing the case for a risk-on approach for buyers near $4,500–$5,000.

Market dynamics reflect mixed signals. While Ethereum’s price has traded below $4,500 in recent days, institutional demand remains robust. BitMine Immersion Technologies added $200 million in ETH to its holdings in a single day, pushing its total treasury to over $6.6 billion, or more than 1% of Ethereum’s circulating supply. Meanwhile, Coinbase’s ETH premium index turned positive, signaling strong US institutional accumulation. This contrasts with recent spot Ethereum ETF outflows, including a $61.7 million net outflow on Tuesday, driven partly by Citigroup’s bearish forecast projecting a year-end price of $4,300.

Technical indicators suggest a constructive setup for ETH. The RSI (Relative Strength Index) sits at 55.9, avoiding overbought territory, while the Chaikin Money Flow (CMF) remains positive, indicating net inflows. Ethereum’s price is consolidating within a rising channel, with key support levels at $4,050 and $3,940, and resistance near $4,350 and $5,200. Analysts like Michael van de Poppe emphasize the importance of holding the $4,400 inflection point, warning that a breakdown could trigger a test of $4,000 before attracting further buying interest.

Derivatives markets highlight both opportunity and risk. Open interest for ETH perpetual futures reached $63.31 billion, with positive but non-extreme funding rates suggesting a cautious long-biased stance. However, recent declines in open interest on CME and Binance—down over 1% and 1.5%, respectively—signal reduced speculative positioning ahead of the Fed’s expected 25-basis-point rate cut. The flattening six-month options skew aligns with this caution, as traders hedge against macroeconomic uncertainty.

Coinbase analysts caution that while the current environment favors buyers, structural risks persist. A spike in Ethereum’s validator exit queue, driven by Kiln’s precautionary withdrawal of ETH, has tightened sellable supply but may create future pressure if the coins are restaked or returned to exchanges. Additionally, the Federal Reserve’s dovish rate cut and forward guidance for further easing in 2026 have bolstered risk-on sentiment, though analysts stress that outcomes will depend on the interplay of macro liquidity, asset-specific flows, and derivatives positioning.

Sources:

[1] Ethereum Price Prediction: Dip Likely as Massive … (https://www.thecoinrepublic.com/2025/09/17/ethereum-price-prediction-eth-risks-falling-as-whales-dump-90k-coins-ahead-of-fed-rate-cut/)

[2] Coinbase Analysts Suggest ETH Could Be in 'Buy the Dip' Zone … (https://bitcoinethereumnews.com/ethereum/coinbase-analysts-suggest-eth-could-be-in-buy-the-dip-zone-amid-neutral-options-and-long-levered-futures/)

[3] Weekly: Markets receive risk-on signal - Coinbase (https://www.coinbase.com/institutional/research-insights/research/weekly-market-commentary/weekly-2025-09-19)

[4] Ethereum 10% Rally Next: “Rally and Short-Squeeze Is Coming” (https://www.coinspeaker.com/ethereum-10-rally-next-rally-and-short-squeeze-is-coming/)