As the market reacts to the latest cryptocurrency legislation, Ethereum (ETH) is flashing warning signs after a new technical sell signal appeared for the first time in months and a significant spike in on-chain profits.
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Ethereum risks a fresh pullback after a major sell signal
On Thursday, Ethereum jumped 3.5% on the day before hitting the $2,320 resistance area over three days. This step comes in the wake of… progress The Cryptocurrency Market Structure Bill, known as the Clarity Act, is up for a full vote in the Senate after a 15-9 bipartisan vote during the Senate Banking Committee’s long-awaited markup session.
The altcoin king has been moving sideways between $2,200 and $2,400 over the past month, what some have called a “no-trade zone.” While many analysts indicate that a break above the upper limit is coming, analyst Ali Martinez says to caution That Ethereum may be close to a major correction.
In X’s post, the market watcher highlighted the appearance of a new sell signal on ETH’s weekly chart for the first time in nine months. He explained that the TD Sequential indicator has been extremely accurate in predicting altcoin trends since April 2025, with every signal on the weekly time frame validated by significant price action over the past year.
In mid-April and mid-June 2025, the main index issued two buy signals, leading to multi-week highs of 87% and 134%, respectively. Meanwhile, it triggered a sell signal in late August 2025, which it identified with 63% accuracy. revision From all-time highs (ATH) towards February lows.
Now, the latest weekly signal “suggests that Ethereum is entering another corrective phase,” which could push the price to new local lows. If selling pressure accelerates, Martinez shared an initial target of $1,900, followed by potential medium and long-term targets of $1,565 and $1,090.
Is it time to turn cautious or bearish?
Blockchain analytics company Santiment Highlight Ethereum posted profits that rose to $74.58 million, a three-week high, even as the price fell 5.5% over the past three days. He noted that while this setup may seem “counterintuitive” given the recent pullback, it doesn’t necessarily mean investors should turn completely bearish.
As the company explained Owners With a much lower cost basis they took profits during the mid-May decline. These traders piled back in February and March when Ethereum was below $2,000 amid market uncertainty and geopolitical risks.
As a result, those who bought during that period are still making profits despite the recent decline and may have “decided to sell while feeling they still have a chance to enjoy a profit.”
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At the same time, the volume of on-chain activity increased, with the four-hour candles showing noticeable price pressure around the $2,241 level. Santiment stressed that more transactions generate more profit-and-loss events, and that even modest individual profits raise overall network-wide volume.
Based on current Ethereum merchant behaviorThe company told investors that they don’t necessarily need to turn bearish, but should instead “be careful” while waiting for clearer signals. “Watch for deeper realized losses as a potential signal of a bottom, and do not position aggressively until the distribution phase shows clear signs of ending,” the report concluded.
Featured image from Unsplash.com, chart from TradingView.com
