Ethereum flashes bearish signal after 30% rally as CLARITY vote looms

Ethereum fell to $1,881.41 after TD Sequential flashed a sell signal near $1,980, threatening to reverse a 30% rally from lows around $1,500.

Ali Martinez, a top on-chain analyst on X, warned on July 31 that the indicator — which previously preceded the rally from approximately $1,500 to highs just under $2,000 — has now flipped bearish as ETH approached $1,980.

ETH is already trading below its nearest support zone at $1,897.27 and threatening to breach $1,875.28. A third level at $1,857.75 could halt the decline, according to the technical setup. The token is down 36.59% year-to-date and has roughly halved in value over the past 12 months.

The CLARITY Act vote scheduled for August 3 could override technical signals. If Congress passes the regulatory framework, some analysts forecast Bitcoin above $600,000 within two years, potentially dragging Ethereum higher as well.

CLARITY Act vote could reset the tape

The CLARITY Act, expected to reach a vote on August 3, has already helped major cryptocurrencies rally over the past 30 days. Most actors in the crypto sector have called for Congress to provide a framework that would bring regulatory certainty and facilitate wider adoption by investors. The bill's passage would mark a significant shift in US crypto policy, potentially opening the door for institutional capital that has remained on the sidelines.

For comparison, Bitcoin is down 27% year-to-date and fell 46.20% over the past 52 weeks, though it has risen 53% since mid-2021. Ethereum's 36.59% YTD decline makes it one of the worst-performing major digital assets in 2026. The broader crypto selloff has also hit treasury firms: BitMine reported $6.6 billion in unrealized losses, while Strategy is approaching $1 billion in losses on its holdings.

The TD Sequential, first described by Tom DeMark in his 1994 book "The New Science of Technical Analysis," uses an asset's performance over time to determine whether the prevailing trend will persist or if a reversal is in order. The same indicator that now signals bearishness previously caught the bottom near $1,500, making its current reading particularly notable for traders who follow the tool.

Meanwhile, the SEC's crypto task force has been meeting with firms to discuss staking litigation review, adding another layer of regulatory uncertainty to the sector. The outcome of the August 3 vote remains unpredictable, and history has shown the CLARITY Act could prove controversial in the long run. If the bill fails, Ethereum's technical setup suggests the next support at $1,857.75 becomes the critical level to watch. If it passes, the bearish signal could be rendered moot as regulatory clarity reshapes the market's risk calculus.

This article is for informational purposes only and does not constitute investment advice.