Key Takeaways:
-
Ether consolidated around $4,000 as lack of demand for futures and weak ETF inflows suggested a scarcity of uptrend.
-
Decreasing fees and activity on the Ethereum network indicate lower on-chain demand.
-
Analysts warned of a decline to $3,500 if support at $4,000 just isn’t reclaimed soon.
Ether (ETH) has been hovering around $4,000 for the past two weeks, a period of consolidation after its flash crash below $3,500 on October 11.
Ether traders are actually assessing the likelihood of further bullish momentum after the US Federal Reserve confirmed a 0.25% rate of interest cut and the tip of quantitative tightening.
ETH/USD four-hour chart. Source: Cointelegraph/TradingView
The price of Ether lacks sustained bullish sentiment
Ether futures are currently trading at a 5% premium to straightforward ETH spot markets, reflecting low demand from buyers using leverage.
Under neutral market conditions, futures premiums are typically between 5% and 10% to account for the longer settlement time. What is much more worrying is that even the recent rally to $4,250 has did not restore the continued bullish sentiment amongst traders.
The bearish trend in Ether futures coincided with outflows from US-based Ethereum spot exchange-traded funds (ETFs) which have dominated since mid-October.
ETF net inflows of $380 million on Monday and Tuesday did little to generate bullish momentum, leaving traders wondering whether a $10,000 ETH price goal stays realistic for this cycle.
Ether's inability to remain above $4,000 will also be attributed to the drop in Ethereum network fees, although this issue has affected all the cryptocurrency market.
Ethereum chain fees totaled $5 million over the past seven days, down 16% from the previous week. In comparison, BNB chain fees fell by 30% and Tron saw a 16% decline. The variety of energetic addresses on Ethereum's base layer fell by 4% over the identical period, while Tron saw a rise of over 100%.
A “classic bear trap” or is the ETH price falling?
Data from Cointelegraph Markets Pro and TradingView shows Ether price printing a red candle on the every day chart for the third consecutive day.
Multiple recovery attempts were rejected on the $4,000 resistance level, leading traders to query whether Ether's uptrend is over or whether the altcoin is undergoing a technical correction.
“$ETH has lost its $4,000 support level again,” analyst Ted Pillows said in an X post on Thursday.
Pillows noted that Ethereum stays within the red despite the “0.25% Fed rate of interest cut, QT ending in a month, and US-China trade talks,” all of which took place within the last 24 hours.
An accompanying chart shows that the subsequent line of defense for ETH was $3,800 and a loss would trigger an additional sell-off, first towards the $3,500-$3,700 demand zone and later to the low of $3,354 hit on August 3.
On the opposite hand, reclaiming $4,000 would encourage bulls to give attention to the $4,200 and $4,500 barriers before a return to all-time highs above $5,000.
Ted Pillows wrote:
“Either it’s a classic bear trap, or the crypto market is declining significantly.”
Fellow analyst FibonacciTrading said a “drop towards $3,300 would still be considered a healthy pullback inside the uptrend held by the EMA cloud,” as shown within the weekly chart below.
“It can be an actual feat if the bulls can defend support here and prepare for the subsequent attack on resistance.”
For pseudonymous analyst Cactus, Ether’s uptrend stays heading in the right direction and a “strong fourth quarter remains to be in sight” so long as bulls hold the $3,800-$4,200 support area.
As Cointelegraph reported, bulls must push the value above the 50-day easy moving average at $4,200 to signal strength and make sure the beginning of the subsequent leg of the upward move.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision.
