Key takeaways:
Ether is stabilizing around $4,000, with weak ETF flows and low demand for futures indicating a lack of bullish sentiment.
A decrease in Ethereum network fees and activity points to reduced on-chain demand.
Analysts caution that a failure to reclaim the $4,000 support could lead to a decline to $3,500.
For the last two weeks, Ether (ETH) has been hovering near $4,000, a phase of consolidation following a rapid drop below $3,500 on October 11.
Traders are now evaluating the potential for bullish momentum after the US Federal Reserve’s announcement of a 0.25% interest rate reduction and the conclusion of quantitative tightening.
Ether price shows lack of sustained bullish sentiment
Currently, Ether futures are priced at a 5% premium compared to regular ETH spot markets, reflecting diminished demand from leveraged buyers.
Related: Are early Ethereum whales becoming active? Old Ether appears to be moving
In a neutral market, futures premiums usually range from 5% to 10% to accommodate the longer settlement period. Alarmingly, even a recent uptick to $4,250 has not rejuvenated sustained bullish sentiment among traders.
The bearish trend in Ether futures has coincided with outflows from US-based Ethereum spot exchange-traded funds (ETFs), which have been prevalent since mid-October.
The $380 million in ETF net inflows earlier this week has failed to spark bullish momentum, leaving traders questioning the feasibility of a $10,000 price target for ETH in this cycle.
Ethereum’s struggle to maintain levels above $4,000 is also tied to falling network fees, which have impacted the overall cryptocurrency market.
Over the past week, Ethereum chain fees reached $5 million, a 16% decline from the prior week. In contrast, fees on BNB Chain fell by 30%, while Tron saw a 16% drop. Meanwhile, active addresses on Ethereum’s base layer decreased by 4%, whereas Tron experienced over a 100% rise.
A “classic bear trap” or is ETH poised for a deeper drop?
According to data from Cointelegraph Markets Pro and TradingView, the Ether price has formed three consecutive red candlesticks on the daily chart.
Multiple attempts to recover have been blocked at the $4,000 resistance level, leading traders to question whether Ether’s upward potential is finished or if it’s merely undergoing a technical correction.
“$ETH has lost its $4,000 support level once again,” noted analyst Ted Pillows in a post on X Thursday.
Pillows highlighted that despite the recent events, including the 0.25% rate cut by the Fed and US-China trade talks, Ethereum remains in decline.
A chart accompanying his analysis indicates that ETH’s next support line is at $3,800; losing this could initiate another sell-off towards the $3,500-$3,700 demand zone and perhaps fall further to the $3,354 low on August 3.
Conversely, if ETH can reclaim $4,000, it would encourage a focus on barriers at $4,200 and $4,500, potentially leading back to all-time highs above $5,000.
Ted Pillows stated:
“This may be a classic bear trap, or the crypto market could plunge further.”
Another analyst, FibonacciTrading suggested a dip toward $3,300 could still be seen as a healthy pullback within the uptrend, supported by the EMA cloud, as illustrated in the weekly chart below.
“If the bulls defend this support, it will demonstrate significant strength and set up for another attempt at resistance.”
Pseudonymous analyst Cactus believes that Ether’s potential for growth remains intact with a “robust Q4 ahead” as long as the bulls maintain the support zone between $3,800 and $4,200.
As Cointelegraph previously reported, bulls need to push above the 50-day simple moving average at $4,200 to indicate strength and confirm a new phase of upward movement.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
