Ethereum Rejected At $4,000 Resistance Again: What Lies Ahead For ETH?

Ash Tiwari

5 months ago

3 mins read

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Due to yesterday’s crypto market rout, Ethereum (ETH) has now faced rejection at the key $4,000 resistance level for three times since March 2024. The second-largest cryptocurrency by reported market cap is now trading at the $3,400 level, down 6.7% in the past 24 hours.

What’s Behind Ethereum’s Underwhelming Price Performance?

While ETH has posted a respectable 47% year-to-date (YTD) gain, it has been outpaced by other major cryptocurrencies like Bitcoin (BTC), Solana (SOL), and XRP, which have recorded significantly higher returns in the same period. Several factors appear to be holding back Ethereum’s price momentum.

One contributing factor is Ethereum’s comparatively weaker brand recognition versus Bitcoin. This was highlighted by the lackluster response to the launch of spot ETH exchange-traded funds (ETFs) in August. The introduction of these ETFs failed to generate any meaningful price movement for ETH.

Data further reveals a significant disparity in investor interest between the two assets. The total net assets held in U.S. spot ETH ETFs currently amount to $11.98 billion. In contrast, spot BTC ETFs hold $109.66 billion – nearly ten times as much.

Additionally, yesterday saw over $60 million in outflows from spot ETH ETFs, marking the largest single-day outflow since November 19. Crypto analyst Ali Martinez pointed out that social sentiment around ETH has reached its lowest point in a year. However, based on historical trends, this could paradoxically signal a bullish opportunity for Ethereum.

Futures traders have also turned bearish on ETH, as the aggregated premium for futures positions flipped negative for the first time since November 6. The market downturn triggered Ethereum’s largest liquidation event since December 9, with $299 million liquidated in a single day. Such large-scale liquidations often lead to cascading sell-offs and heightened price volatility.

Another recurring concern stems from the Ethereum Foundation’s tendency to sell ETH near local price peaks. In a recent X post, Lookonchain noted that the Ethereum Foundation sold 100 ETH on December 17. Following this sale, ETH’s price has dropped approximately 17%.

Further skepticism surrounds Ethereum’s supply issuance. A recent Binance Research report highlighted that ETH’s relatively high issuance rate raises questions about its “ultrasound money” narrative, which suggests Ethereum is a deflationary asset.

Is Ethereum Set For A Bounce?

Seasoned crypto analyst @Trader_XO stated that they bought spot ETH at the $3,200 price level yesterday. The analyst added that they expect “a good few weeks” of price consolidation before ETH’s next leg up.

Meanwhile, crypto trader @CryptoShadowOff identified a potential ascending triangle formation on ETH’s monthly chart. According to their analysis, ETH could drop further to the $2,800 range before targeting a new all-time high (ATH).

Market analyst @CryptoBullet1 emphasized that on the 4-hour chart, ETH has not been this oversold since August 5, indicating a bounce may 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

Ash Tiwari

Ash is a dedicated crypto researcher and blockchain enthusiast with a passion for diving deep into the evolving world of decentralized technologies. With a background in writing and a natural curiosity for how digital assets are shaping the future, he has immersed himself in various sectors of the cryptocurrency space, including decentralized finance (DeFi), NFTs, and liquidity mining. His journey into crypto started with a desire to fully understand the technology behind it, leading him to explore and engage with these systems firsthand.

Ash’s approach to DeFi goes beyond surface-level research as he actively participates in decentralized protocols, testing their functionality to gain a deeper understanding of how they operate. From experimenting with staking mechanisms to exploring liquidity mining strategies, he is hands-on in his exploration, which allows him to provide practical, real-world insights that go far beyond theoretical knowledge. This immersive experience has helped him develop a comprehensive grasp of smart contracts, token governance, and the broader implications of decentralized platforms on the future of finance.

In the NFT space, Ash’s interest is driven by the technology’s potential to reshape ownership and creativity in the digital age. He has explored various NFT projects, gaining insights into how these digital assets function within different ecosystems. His focus is on understanding the evolving relationship between creators and communities, as well as the innovative uses of blockchain technology to establish authenticity and provenance in the digital world. Ash’s research in this area often touches on the intersection of culture, technology, and community-driven projects.

A key area of his expertise lies in liquidity mining, where he has engaged with various decentralized platforms to understand how liquidity provision contributes to the functionality and security of DeFi ecosystems. Ash’s hands-on involvement has allowed him to analyze the risks, rewards, and broader implications of liquidity pools, giving him a well-rounded perspective on this integral part of DeFi. His understanding of risk management and protocol design allows him to provide insights into how these systems can be navigated effectively, with an emphasis on both opportunity and caution.

When it comes to communicating these complex topics, Ash’s writing is grounded in clarity and depth. He excels at breaking down intricate blockchain concepts into easily digestible information for a wide audience. Whether explaining the workings of decentralized exchanges or outlining the future potential of blockchain technology, Ash ensures that his content is accessible to both those new to the space and experienced participants looking for deeper insights.

Beyond DeFi and NFTs, Ash explores a wide array of emerging blockchain applications. His research spans areas like cross-chain technologies, decentralized governance, and blockchain’s potential to integrate with traditional finance. He is continuously learning and adapting to the latest developments, ensuring that his insights are both timely and relevant. His interest extends to how these technologies are creating new possibilities for decentralization, transparency, and trust in a variety of industries.

Ash’s commitment to engaging with the crypto space firsthand gives him a unique perspective that goes beyond what can be learned from research alone. His practical involvement allows him to stay ahead of the curve, offering readers and enthusiasts a clear and comprehensive understanding of the rapidly evolving world of blockchain. Whether delving into the technical mechanics of DeFi or exploring the cultural impact of NFTs, Ash’s approach is always rooted in curiosity, research, and a desire to make this technology accessible to all.

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