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Ethereum's price is facing significant resistance around the $4,000 mark, leading to frustration among traders as repeated attempts to break through this level have been met with sell-offs. This persistent struggle comes as spot Ethereum ETF investors continue to see net redemptions, signaling weak demand and raising concerns about potential further price declines.
Key Takeaways
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Declining spot buying and mounting spot Ethereum ETF outflows indicate weak demand, risking further losses for Ether.
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Technical analysis suggests a potential "bear flag" pattern, projecting a 20% price drop to $3,100.
Resistance at $4,000
Ether (ETH) recently fell back to $3,800 after failing to sustain its position above the crucial $4,000 psychological barrier. This level has proven to be strong resistance, with the last rejection from this zone in December 2024 preceding a significant 66% price drop. Analysts emphasize that a decisive daily close above $4,000 is necessary for bulls to secure a recovery and move back into previous price ranges. Some believe that if bulls defend $4,000, momentum could rebuild towards $5,000, but breaking the $4,000-$4,300 supply zone is critical for signaling a new uptrend.
Lack of Buyers and ETF Outflows
The inability of ETH to hold above $4,000 appears to be driven by a lack of new buyers. The spot volume delta metric, which measures net buying and selling volumes on exchanges, remains negative. This suggests that recent price rebounds may lack the momentum from consistent buying pressure, potentially leading to deeper pullbacks. Furthermore, demand for spot Ethereum ETFs has weakened, with these investment products experiencing outflows on six of the last eight days, totaling $640.5 million over that period. A return of ETF inflows and new ETH buyers are deemed essential for bulls to target $5,000.
Bear Flag Pattern Targets $3,100
Technical analysis of Ether's price action over the past 14 days has revealed a "bear flag" pattern on the 12-hour chart. The price breaking below the lower boundary of this flag at $4,000 on Tuesday signals a potential significant breakdown. The measured target from this pattern suggests a drop to around $3,120, representing approximately a 20% decrease from current levels. The relative strength index (RSI) remaining below the 50 mark further supports a bearish outlook. Despite these bearish indicators, some traders remain optimistic, viewing the current price action as a retest of a key breakout level before resuming an uptrend, with "shakeouts" potentially clearing the way for further gains.
Sources
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Here’s Why ETH Price Can’t Hold Above $4K, Cointelegraph.
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Ethereum fails again above $4K as traders grow frustrated with shakeouts, CediRates.
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Ethereum fails again above $4K as traders grow frustrated with shakeouts, Crypto Adventure.
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