Due to yesterday's crypto market crash, Ethereum (ETH) has faced rejection at the key resistance level of $4,000 three times since March 2024. The second-largest cryptocurrency by market capitalization is currently trading at $3,400, down 6.7% in the past 24 hours.
What lies behind Ethereum's poor price performance?
While ETH has seen significant gains year-to-date (YTD), it has been outperformed by other major cryptocurrencies like Bitcoin (BTC), Solana (SOL), and XRP, which have shown much higher returns during the same period. Several factors seem to be hindering Ethereum's price momentum.
One contributing factor is that Ethereum's brand awareness is relatively weaker compared to Bitcoin. The lackluster response to the launch of spot ETH exchange-traded funds (ETFs) in August highlights this. The introduction of these ETFs failed to bring any significant price movement to ETH.
Data further reveals a significant difference in investor interest between the two assets. The total net assets held by U.S. spot ETH ETFs currently stand at $11.98 billion. In contrast, spot BTC ETFs hold $109.66 billion, nearly ten times that amount.
Additionally, over $60 million in spot ETH ETF outflows were recorded yesterday, marking the largest single-day outflow since November 19. Cryptocurrency analyst Ali Martinez pointed out that social sentiment surrounding ETH has reached its lowest point in a year. However, according to historical trends, this could paradoxically signal a bullish opportunity for Ethereum.
Futures traders have also turned bearish on ETH, as the total premium on futures positions has turned negative for the first time since November 6. The market downturn triggered the largest liquidation event for Ethereum since December 9, with $299 million liquidated in a single day. Such large-scale liquidations typically lead to a series of sell-offs and increased price volatility.
Source: Coinglass
Another recurring concern stems from the Ethereum Foundation's tendency to sell ETH near local price peaks. In a recent post on X, Lookonchain noted that the Ethereum Foundation sold 100 ETH on December 17. Following this sale, the price of ETH dropped by approximately 17%.
Concerns about Ethereum's supply issuance are further raised. A recent report from Binance Research emphasized that ETH's relatively high issuance rate has raised questions about its 'ultrasound money' narrative, suggesting that Ethereum is a deflationary asset.
Will Ethereum rebound?
Experienced crypto analyst @Trader_XO stated that they purchased spot ETH at $3,200 yesterday. The analyst added that they expect a few weeks of price consolidation before ETH's next rally.
Meanwhile, cryptocurrency trader @CryptoShadowOff identified a potential ascending triangle formation on ETH's monthly chart. According to their analysis, ETH may further drop to the $2,800 range before targeting a new all-time high (ATH).
Source: CryptoShadow on X
Market analyst @CryptoBullet1 emphasized that according to the 4-hour chart, ETH has not been in an oversold condition since August 5, indicating that a rebound may be imminent. At the time of writing, ETH is trading at $3,400, down 6% over the past 24 hours.
