Ethereum (CRYPTO:ETH) is trading near $4,100 on Friday, after a sharp sell-off following its rejection of $4,700 and renewed fears of U.S. regulatory pressure targeting decentralized finance.
Ethereum Price Action Points to Retest $3,800
ETH price analysis (Source: TradingView)
Ethereum fell below its ascending channel, signaling a clean break after repeated rejections near $4,500.
The move pushed ETH below its 20, 50, and 100-day exponential moving averages, placing immediate support at $4,100.
The momentum favors sellers, and the price is now oscillating along an ascending trendline that connects the June breakout zone around $3,800.
Traders view this level as the next key test for the bulls. If ETH fails to stabilize above $4,100, the path to $3,800 becomes increasingly likely.
Bearish Indicators Flash as Ethereum Momentum Crashes
The 4-hour RSI sits near 27, in oversold territory, but still shows strong bearish momentum.
A quick recovery above $4,350 would ease the selling pressure, while a daily close below $4,100 opens the door to a retest of $3,800.
On the positive side, only a decisive crossing of $4,500 would neutralize the bearish outlook.
On-Chain Data Confirms Strong Ethereum Selling Pressure
ETH net flows (Source: Coinglass)
Data from Coinglass shows net outflows of $235 million on October 10, reflecting a strong repositioning of investors following Ethereum’s recent rally.
Although capital outflows are generally a sign of accumulation, this trend appears to align with profit-taking rather than new purchases.
Since July, repeated outflow spikes have failed to generate sustained bullish momentum, indicating lower conviction among long-term holders.
This divergence between on-chain activity and price structure supports the bearish scenario in the near term, especially as ETH struggles to reclaim key support levels.
How Senate Democrats’ DeFi Proposal Could Impact Ethereum
The Senate’s proposed decentralized financial framework may not name Ethereum directly, but the network is at the center of its implications.
Ethereum underpins most decentralized lending, trading, and stablecoin activities, making it highly exposed to any policy changes.
According to the proposal, individuals or teams providing front-end access to DeFi protocols would have to register as brokers with the SECOND Or CFTC.
This definition could extend to developers or teams managing interfaces for Ethereum-based protocols such as Uniswap (CRYPTO: UNI) or Aave (CRYPTO: AAVE).
If implemented, US users could face restricted access and developers could move their operations overseas to avoid liability.
Stablecoins and the role of Ethereum in global settlement
Ethereum remains the dominant layer for dollar-pegged stablecoins such as USDT And USDCwhich anchors more than $250 billion in liquidity.
Reports of JPMorgan Chase & Co. And Standard Chartered Plc project over $1 trillion in stablecoin-related flows by 2027.
If US policy limits how stablecoins interact with DeFi platforms, this demand could shift to offshore markets or competing blockchains.
Meanwhile, Wall Street institutions like Goldman Sachs Group Inc. And Citigroup Inc. are building permissioned blockchain rails for internal settlements.
This creates a divide between regulated systems run by banks and open networks like Ethereum that prioritize transparency and decentralization.
Why it matters
Ethereum’s fight for $3,800 isn’t just another technical test, it’s the point where market structure collides with politics.
The network carries the bulk of DeFi lending, stablecoin liquidity, and on-chain settlement – precisely the areas Washington is moving to regulate.
If Ethereum loses this level as regulators advance restrictive frameworks, it could reshape the way capital flows on decentralized rails.
This moment is less about a chart and more about whether Ethereum remains the backbone of open finance or cedes ground to permissioned blockchains run by Wall Street.
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Image: Shutterstock
