Ethereum Set to Bounce Back Strong After Brief Pullback

Analysts see the current pullback as a healthy correction in its broader bullish trend. Institutional interest is also still strong, with firms like Grayscale, SharpLink Gaming, and BitMine continuing to accumulate ETH. Meanwhile, Ethereum developers unveiled Kohaku, a new open-source initiative aimed at boosting wallet privacy and security through modular tools and zero-knowledge technologies. The project is part of the Ethereum Foundation’s newly formed Privacy Cluster.

Ethereum Gears Up for Powerful Move

Ethereum’s recent weakness could soon give way to a strong rebound. This is according to analysts at Fundstrat Global Advisors. Mark Newton, the firm’s managing director, said that Ethereum’s pullback over the past few days seems temporary, and suggested that the cryptocurrency could bottom out in the next one to two days before resuming its upward trajectory. 

Newton believes Ethereum may dip to around $4,200, which he described as an “optimal area of support,” before rising toward $5,500 in the next few weeks. His comments were shared by BitMine chairman and Fundstrat adviser Tom Lee, who also pointed out the continued institutional confidence in Ethereum’s long-term prospects despite short-term volatility.

Newton characterized the current movement as a “minor three-wave pullback,” a technical pattern that often precedes a rebound. Ethereum already retraced from its September rally highs, falling from $4,750 earlier in the week to below $4,300 before recovering close to $4,350 in Friday trading. Analysts see the ongoing consolidation as healthy as it keeps Ethereum rangebound in a channel that was established since the asset first broke above $4,000 in early August.

ETH’s price action over the past month (Source: CoinMarketCap)

Market analysts like Benjamin Cowen said the “choppy price action” could continue until Ethereum’s “bull market support band catches up,” which is a process that might take several more weeks. 

Other experts, like CoinW’s chief strategy officer Nassar Achkar, linked the expected bounce to improving technical conditions and a possible shift in US monetary policy. Achkar argued that any short-term dips represent “strategic accumulation opportunities,” especially as macroeconomic signals point toward potential Federal Reserve easing that could inject new liquidity into the market.

Institutional investors are also still bullish on Ethereum. Grayscale has been actively staking large sums of ETH for its newly launched product, while SharpLink Gaming, the world’s second-largest Ethereum treasury holder, believes that Ethereum is becoming the “foundation of global finance.” BitMine, led by Tom Lee, also expanded its Ethereum holdings by adding roughly 23,823 ETH—valued at more than $100 million—to its treasury. 

Ethereum Unveils Kohaku

Meanwhile, Ethereum developers introduced a new initiative called Kohaku, a roadmap that is designed to enhance wallet privacy and security through a modular and developer-friendly framework. It was announced by Ethereum Foundation coordinator Nicolas Consigny, and it seeks to provide a set of privacy and security building blocks for the Ethereum ecosystem to help developers and advanced users gain more control over how their wallets handle sensitive data.

The project’s main goal is to create a software development kit (SDK) for secure wallet functionality, alongside a reference wallet that demonstrates these capabilities in action. The first version will be a browser extension based on the Ambire wallet, and will cater to users who value customization and privacy. 

Kohaku is a collaboration involving several major Ethereum ecosystem teams, including Ambire, Railgun, DeFi Wonderland, Helios, and Oblivious Labs. It will be open source, and will allow contributions from the community through GitHub.

One of Kohaku’s key objectives is to minimize wallets’ reliance on centralized infrastructure that can monitor or log user transactions. To achieve this, it will introduce features like private sending and receiving, IP address obfuscation, per-DApp account isolation, and peer-to-peer transaction broadcasting that bypasses traditional remote procedure call (RPC) servers. The project also plans to integrate privacy-preserving recovery mechanisms like ZK Email and Anon Aadhaar. These tools allow users to verify their identities or emails using zero-knowledge proofs, ensuring access recovery without exposing personal data.

Some of Kohaku’s features

In the long term, Kohaku’s vision extends to creating security mechanisms that operate “as close as possible to the silicon.” This suggests the development of a native Ethereum browser capable of securely interacting with decentralized applications, IPFS content, and blockchain networks without data leakage.

Kohaku’s launch follows the Ethereum Foundation’s formation of a new “Privacy Cluster,” a coalition of 47 researchers, engineers, and cryptographers focused on advancing privacy at the protocol level. The cluster includes Kohaku as one of its key projects, and will collaborate with the Privacy and Scaling Explorations (PSE) team to bring privacy-centric features like confidential identities, private payments, and zero-knowledge systems directly to Ethereum’s layer-1 network.