Ether (ETH) has been trapped in a narrow trading range of $4,200 to $4,500 for the past two weeks, leading to increasing bearish sentiment among traders. This stagnation coincides with a decline in spot volume, signaling weak demand, which raises concerns about the cryptocurrency’s price vulnerability. Analysts warn that if key support levels are breached, ETH could plunge to around $3,500, marking a significant decline from its current trading levels.
Market sentiment has soured, exacerbated by Bitcoin’s recent drop below the $100,000 mark, prompting a rise in “sell calls,” as reported by market intelligence firm Santiment. The firm’s analysis indicates a shift in trader psychology, with an increasing number of pessimistic forecasts for both Ether and Bitcoin. Keywords associated with selling and bearish expectations have surged since Ether reached its all-time high of $4,950 in late August.
Reflecting this trend, traders have reduced their activity in the Ethereum market. Data from Glassnode reveals a stark 85% drop in ETH trading volume, plummeting from $18.5 billion on August 22 to just $2.6 billion by September 8. This downturn suggests that investor conviction is waning, leading to a subdued demand for Ethereum.
While there has been a slight improvement in the spot Cumulative Volume Delta (CVD), which measures the net difference between buying and selling, it remains well below levels seen just weeks ago. This indicates that despite some easing of selling pressure, overall interest in ETH is still lacking. The decline in institutional participation is notable, with Ethereum exchange-traded funds (ETFs) seeing over $1.04 billion in net outflows over six consecutive trading days, contributing further to the selling pressure.
Currently, ETH is retesting the lower trendline of a symmetrical triangle chart pattern at $4,280. A close below this critical level could attract further bearish sentiment, potentially pushing the price down to around $3,600, representing a 16% drop. Prominent analyst Michael van de Poppe suggests that if ETH falls to the $3,500 to $3,800 range, it could set the stage for a recovery, marking an “ideal scenario” for traders.
Another analyst, Ted Pillows, has identified significant liquidity clusters in the $3,600 to $4,000 range, indicating that a drop may occur to “sweep” up this liquidity before any upward reversal can take place. He points out that while Ethereum currently faces headwinds from macroeconomic uncertainties and declining ETF interest, the potential for a rebound remains contingent on retesting these pivotal support levels.
With increased scrutiny on both price action and market dynamics, traders are urged to exercise caution, as the current volatility might signal a critical juncture for Ethereum’s future trajectory. As always, potential investors are reminded to conduct thorough personal research before making trading decisions, given the inherent risks involved in cryptocurrency investments.
