Ethereum (ETH) has dropped sharply after failing to hold above the $3,400 resistance level. The move has pushed the price below a key support line, triggering increased selling across both spot and derivatives markets.
As of press time, ETH trades arpimd at $2,960, down nearly 12% over the past week. Trading activity has picked up, but buyers appear to be stepping back.
Rejection at $3,400 Triggers Sell-Off
Ethereum was halted near $3,400, a level traders had been watching. Analyst Kamran Asghar said the rejection came โperfectly off the OTE selling area,โ referring to a zone often targeted by sellers. After that move, the price broke through ascending support, putting the $2,600 zone back in focus.
$Ethereum Rejected & Ejected.
Perfectly played off the OTE Selling Area at $3,400. Weโve now snapped the ascending support, and the path of least resistance is looking like a trip back to the $2,600 value area. pic.twitter.com/6JQuZIqpmY
โ ๐๐๐ฆ๐ซ๐๐ง ๐๐ฌ๐ ๐ก๐๐ซ (@Karman_1s) January 21, 2026
In the past day, Ethereum lost nearly 5% while volume rose to over $31 billion. Derivatives volume also climbed 40%, reaching $71.75 billion, per CoinGlass data. But open interest fell by about 5% to $39.35 billion, showing many traders were closing positions instead of adding risk.
Meanwhile, heatmap data from order books show heavy buying interest sitting below the current price. Analyst Kriptoholder noted demand in the $2,800โ$2,850 range, with larger buy walls around $2,500โ$2,600.
These areas could attract buyers if the asset drops further. Pointing to large pending orders from bigger players, Kriptoholder said,
โThe order book heatmap transparently reveals the true liquidity depth resting below the price action.โ
ETF Outflows and Falling Exchange Reserves
US spot ETH ETFs recorded net outflows of $229.95 million on January 20, ending a five-day inflow streak (per SoSoValueโs data). The shift in flow direction came during the same period as the price decline, suggesting possible profit-taking or reduced short-term confidence.
Meanwhile, ETH held on centralized exchanges continues to shrink. According to CryptoQuant analyst Arab Chain, reserves have dropped to 16.2 million ETH, the lowest since 2016. Binance alone saw a fall from 4.168 million to 4.0 million tokens since early January.
In addition, Ethereum staking also hit a new record, with more coins being locked up than ever before. This reduces circulating supply and may support price once selling pressure fades.
Longer-Term Setup Remains in Focus
Some traders are watching for a larger setup to play out. As CryptoPotato reported, ETH may be forming an inverse head-and-shoulders pattern, with a possible breakout target near $4,400. That level would need to be cleared for the structure to be confirmed.
Elsewhere, a post from Bitcoinsensus raised the question: โIs a $10K ETH on the table for this cycle?โ Based on past cycles and reduced returns, the estimate suggested a possible range of $10Kโ$15K. However, market conditions remain fluid, and the near-term trend has turned lower.
The post ETH Crashes 12% Weekly: Is a Drop to $2,600 Next? appeared first on CryptoPotato.
