Key Summary:
The spot buying has decreased, and the continuous outflow of Ethereum spot ETFs indicates weak demand, putting Ethereum at risk of further decline.
The bearish flag pattern for Ethereum suggests a price drop of 20%, down to $3,100.
Ethereum (ETH) fell to $3,800 on Tuesday, failing to hold the $4,000 level, as Ethereum spot ETF investors continued to net redeem, with technical indicators showing a potential deeper correction in Ethereum's price.
Since hitting a low of $3,500 on October 11, Ethereum has rebounded 16%, but faced selling pressure near the psychological level of $4,000, hindering its upward momentum.
Trader Philakone stated on the X platform on Monday, "There is strong resistance at $4,000."
Notably, the last time ETH/USD faced resistance in this range was in December 2024, after which the price dropped by 66%, as shown in the chart below.
Therefore, bulls need to push and maintain the price above $4,000 to ensure the continuation of the rebound.
Analyst Daan Crypto Trades recently mentioned on the X platform, "This level has always been difficult for bulls to break through, and it is crucial in the short to medium term."
The analyst added that if the daily close decisively breaks this level, it would allow Ethereum to "return to the previous price range and escape the lows," stating:
Analyst Jas Crypto further noted that this level "determines whether this round of correction is a deeper correction or a brief adjustment," stating:
According to Cointelegraph, bulls need to push Ethereum's price above the $4,000 to $4,300 supply zone to initiate a new upward trend.
Currently, due to the lack of buyers, Ethereum struggles to hold the $4,000 level.
The spot trading volume change indicator shows that despite several rebounds recently, the net spot buying volume on exchanges remains negative.
This indicates that the price rebound lacks sustained buying momentum, which could lead to a deeper correction.
Without actual demand, any attempts to break through may lack the strength needed to push Ethereum past the critical range.
According to SoSoValue data, the demand for Ethereum spot ETFs is also declining, with fund outflows occurring on six of the past eight days.
Statistics show that on Monday alone, Ethereum ETF had a net outflow of $145.7 million, with a cumulative net outflow of $640.5 million over the past eight days.
ETF inflows must recover, and new ETH buyers must step in for bulls to have a chance to return to $5,000.
Once the classic bearish pattern is confirmed, ETH prices are expected to resume a dominant downward trend.
Over the past 14 days, Ethereum's price action has formed a bearish flag pattern on the 12-hour chart, as shown in the chart below, with prices breaking below the flag's lower boundary of $4,000 on Tuesday, marking the start of a significant correction.
Based on the height of the flagpole, the target price is approximately $3,120, representing a drop of about 20% from the current price.
The relative strength index remains below 50, indicating significant downward pressure in the market.
Despite the strong bearish sentiment, traders remain optimistic about Ethereum's upside potential, citing improved credit conditions and continued buying by Ethereum custodians.
Analyst Jelle stated that Ethereum is currently just retesting the critical breakout level of $4,000, with the potential for further upward movement.
Judging from sentiment on CT, you'd think $ETH was in the gutter - but it's just holding the breakout area as support. This looks very ready for a rapid expansion higher. Shakeouts are working, it seems. pic.twitter.com/IUpfnpf5VQ
Related: The head of Polygon stated that he has been "questioning his loyalty to Ethereum (ETH)."
Original: “Ethereum (ETH) fails to break above $4,000 again, traders feel frustrated due to shakeouts”
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