Key Points:
Due to insufficient futures demand and weak ETF flows, Ethereum is consolidating around $4,000, indicating a lack of bullish sentiment.
The decline in Ethereum network fees and activity suggests a decrease in on-chain demand.
Analysts warn that if the $4,000 support level fails to recover quickly, the price could drop to $3,500.
Ethereum (ETH) has fluctuated around $4,000 over the past two weeks, marking a consolidation period after the flash crash below $3,500 on October 11.
After the Federal Reserve confirmed a 0.25% rate cut and ended quantitative tightening, Ethereum traders are assessing the potential for further bullish momentum.
Ethereum futures are currently trading at a 5% premium relative to the standard ETH spot market, reflecting lower demand from leveraged buyers.
In neutral market conditions, futures premiums typically range from 5% to 10% to compensate for longer settlement periods. More concerning is that even after a recent rebound to $4,250, it failed to restore traders' sustained bullish sentiment.
The bearish trend in Ethereum futures aligns with the outflows from U.S. Ethereum spot exchange-traded funds (ETFs) that have dominated since mid-October.
The $38 million net inflow into ETFs on Monday and Tuesday failed to generate any bullish momentum, leading traders to question whether the $10,000 ETH price target remains realistic in this cycle.
Ethereum's inability to hold above $4,000 can also be attributed to the decline in Ethereum network fees, although this issue has affected the entire cryptocurrency market.
In the past seven days, Ethereum chain fees totaled $5 million, a 16% decrease from the previous week. In comparison, BNB chain fees fell by 30%, and Tron by 16%. The number of active addresses on the Ethereum base layer decreased by 4% during the same period, while Tron saw an increase of over 100%.
Data from Cointelegraph Markets Pro and TradingView indicates that Ethereum's price has recorded red candles on the daily chart for the third consecutive time.
Ethereum's multiple attempts to rebound have been rejected at the $4,000 resistance level, prompting traders to begin questioning whether ETH's upward trend has ended or is merely entering a technical correction phase.
“$ETH has once again lost the $4,000 support level,” analyst Ted Pillows stated in a post on X on Thursday.
Pillows noted that despite the “Federal Reserve cutting rates by 0.25%, the end of quantitative tightening within a month, and U.S.-China trade negotiations” occurring in the past 24 hours, Ethereum is still down.
The accompanying chart shows that ETH's next line of defense is $3,800; losing it would trigger another round of selling, first targeting the demand zone of $3,500-$3,700, followed by the low of $3,354 reached on August 3.
On the upside, reclaiming $4,000 would boost bullish confidence, focusing on the obstacles at $4,200 and $4,500, before returning to historical highs above $5,000.
Ted Pillows added:
Analyst FibonacciTrading stated, “A drop to $3,300 would still be seen as a healthy pullback in the uptrend, supported by the EMA cloud,” as shown in the weekly chart below.
Anonymous analyst Cactus believes that as long as bulls hold the support range of $3,800 to $4,200, Ethereum's upward trend remains robust, with “a strong fourth quarter still anticipated.”
According to Cointelegraph, bulls must push the price above the 50-day simple moving average (SMA) at $4,200 to demonstrate strength and confirm the start of the next upward trend.
Related: Avalanche Q3 Wrap-Up: Government Stablecoin Launch, $300 Million Hedge Fund Tokenization
Original: “Why Can't Ethereum Hold $4,000? Data Turns Bearish, ETH Recovery Outlook in Doubt”
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