Thanks to yesterday's crypto market normalization, Ethereum (ETH) has now faced rejection at the key level against $4,000 for three times since March 2024. The second largest cryptocurrency by market cap which is now reported to be trading at $3,400, down 6.7% in the past 24 hours.
What is behind Ethereum's low price performance?
While ETH has posted a respectable 47% year-to-date (YTD) gain, it has been outperformed by other major cryptocurrencies such as Bitcoin (BTC), Solana (SOL), and XRP, which have seen returns to record a record high in the same period. . Several factors seem to be holding back Ethereum's price movement.
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One factor that contributes to the brand recognition of Ethereum is relatively weaker compared to Bitcoin. This was clarified by the impure response to the August launch of ETH spot exchange traded funds (ETFs). The introduction of these ETFs failed to produce any meaningful price movement for ETH.
Data further indicating a significant difference in investor interest between the two funds. The total net assets held in the US spot ETH ETF is currently $11.98 billion. By comparison, spot BTC ETFs hold $109.66 billion – almost ten times as much.
Additionally, yesterday saw more than $60 million in outflows from the spot ETH ETF, marking the largest one-day outflow since November 19. Crypto analyst Ali Martinez pointed out that there is a social feeling around ETH on it. arrived its lowest in a year. However, based on historical trends, this could paradoxically indicate a bullish opportunity for Ethereum.
Futures traders have also turned bearish on ETH, as the overall price for futures positions turned negative for the first time since November 6th. The market crash triggered Ethereum's biggest liquidation event since December 9, with $299 million liquidated in one day. Such large-scale liquidation often results in sales dispersion and higher price volatility.
Another frequent concern stems from the Ethereum Foundation's tendency to sell ETH near local price peaks. In recent X mailLookonchain noted that the Ethereum Foundation sold 100 ETH on December 17. After this sale, the price of ETH has fallen by about 17%.
There is further uncertainty about Ethereum's supply chain. Recent Binance Research Report marked that ETH has a relatively high issuance rate raises questions about its “ultrasound currency” statement, which suggests that Ethereum is a deflationary asset.
Is Ethereum set to bounce?
Experienced crypto analyst @Trader_XO said which they bought spot ETH at the price level of $3,200 yesterday. The analyst said they expect “a good few weeks” of price consolidation before ETH's next move.
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Meanwhile, crypto trader @CryptoShadowOff pointed to the formation of a possible ascending triangle on ETH's monthly chart. According to their analysis, ETH could fall further to the previously $2,800 range aiming modern high level (ATH) .
Market analyst @CryptoBullet1 pressure not on the 4-hour chart, ETH has been oversold since August 5th, indicating that a bounce could be on the horizon. At press time, ETH trades at $3,400, down 6% in the past 24 hours.
Featured image from Unsplash, charts from Coinglass, X, and Tradingview.com
