Key Takeaways
- Ether (ETH) has consolidated around the $4,000 mark, with a lack of strong futures demand and net outflows from spot ETFs indicating subdued bullish sentiment.
- A decrease in Ethereum network fees and transaction activity suggests a potential softening of on-chain demand for the cryptocurrency.
- Analysts are closely watching the $4,000 support level, warning of a possible drop to $3,500 if it is not defended in the short term.
Ether (ETH) has been trading within a narrow range around the $4,000 level for the past two weeks. This period of consolidation follows a sharp decline below $3,500 experienced on October 11th. Crypto market participants are now evaluating the potential for renewed upward momentum, particularly after the US Federal Reserve announced a 0.25% interest rate cut and the cessation of quantitative tightening.
Ether Price Lacks Sustained Bullish Sentiment
Current data indicates that Ether futures are trading at approximately a 5% premium compared to spot ETH markets. This suggests a limited appetite for leveraged buying among traders. Typically, a neutral market environment sees futures premiums ranging between 5% and 10%, accounting for the longer settlement period.
Importantly, even a recent price recovery to $4,250 has not translated into sustained bullish sentiment among market participants. The prevailing downward trend in Ether futures has been accompanied by notable outflows from US-based Ethereum spot ETFs, a pattern that has been observed since mid-October.
The modest $380 million in net ETF inflows recorded on Monday and Tuesday failed to generate significant bullish momentum, leading traders to question the feasibility of previous $10,000 ETH price targets for the current market cycle.
Ether’s struggle to maintain a position above $4,000 can also be linked to a noticeable decline in Ethereum network fees. While this trend has impacted the broader cryptocurrency market, it is a significant factor for ETH’s price action.
Over the past seven days, Ethereum chain fees amounted to $5 million, marking a 16% decrease from the preceding week. In comparison, BNB Chain experienced a 30% drop in fees, and Tron saw a 16% decline. The number of active addresses on Ethereum’s main layer also decreased by 4% during the same period, contrasting with Tron’s significant over 100% increase.
Is ETH Facing a Bear Trap or Further Decline?
Data from Cointelegraph Markets Pro and TradingView indicates that Ether is currently displaying a third consecutive day of negative price action on the daily chart. Multiple attempts to rebound have been met with resistance at the $4,000 level, prompting speculation among traders about the sustainability of ETH’s upside potential or whether the asset is undergoing a technical correction.
Analyst Ted Pillows noted in an X post on Thursday, ETH has lost its $4,000 support level again. He highlighted that despite recent positive macroeconomic news, including the Fed’s 0.25% rate cut, the end of quantitative tightening, and ongoing US-China trade talks within the last 24 hours, Ethereum’s price has remained under pressure.
Pillows’ accompanying chart analysis suggests that the next crucial support level for ETH is $3,800. A breach of this level could trigger further selling pressure, potentially driving the price towards the $3,500-$3,700 demand zone and subsequently to the August 3rd low of $3,354. On the other hand, a successful reclamation of the $4,000 resistance could embolden bulls to target resistance levels at $4,200 and $4,500, paving the way for a move back towards all-time highs exceeding $5,000.
Either this is a classic bear trap, or the crypto market is going way lower.
Ted Pillows
Fellow analyst FibonacciTrading suggested that a dip towards $3,300 could still be considered a healthy pullback within the existing uptrend, provided it is supported by the Exponential Moving Average (EMA) cloud on the weekly chart. They added, It will be a real show of strength if the bulls can defend support here and set up for the next attack on resistance.
It will be a real show of strength if the bulls can defend support here and set up for the next attack on resistance.
FibonacciTrading
Pseudonymous analyst Cactus maintains a bullish outlook, believing that Ether’s upside remains on track for a strong fourth quarter. This outlook is contingent on bulls successfully defending the $3,800-$4,200 support region. As previously reported, for bulls to signal strength and confirm the next upward move, the price needs to decisively break above the 50-day Simple Moving Average (SMA), currently situated around $4,200.
Expert Summary
The crypto market is closely monitoring Ether’s price action as it consolidates around the $4,000 level. Factors such as reduced futures demand, ETF outflows, and declining network fees are contributing to cautious sentiment. Analysts suggest that maintaining the $4,000 support is critical to prevent further declines, while a sustained upward move may depend on breaking key resistance points.