Due to the cryptocurrency market crash yesterday, Ethereum (ETH) has faced rejection at the key $4,000 resistance level three times since March 2024. The second-largest cryptocurrency by market capitalization is currently trading at $3,400, having fallen 6.7% in the past 24 hours.
What are the reasons for Ethereum's poor price performance?
Although ETH has seen significant gains year-to-date (YTD), reaching 47%, its gains have been surpassed by other major cryptocurrencies such as Bitcoin (BTC), Solana (SOL), and XRP, which have seen significantly higher increases during the same period. Several factors seem to be hindering Ethereum's price momentum.
One factor is that Ethereum's brand recognition is relatively weak compared to Bitcoin. The lukewarm response to the spot ETH exchange-traded fund (ETF) launched in August highlights this. The launch of these ETFs failed to bring any meaningful price changes for ETH.
Data further reveals a significant difference in investor interest between the two assets. Currently, the total net assets held by the U.S. spot ETH ETF are $11.98 billion. In contrast, the spot BTC ETF holds assets worth $109.66 billion, nearly ten times that of the former.
Additionally, the outflow from the spot ETH ETF yesterday exceeded $60 million, marking the largest single-day outflow since November 19. Cryptocurrency analyst Ali Martinez pointed out that social sentiment around ETH has reached a one-year low. However, based on historical trends, this may instead signal a bullish opportunity for Ethereum.
Futures traders are also beginning to take a bearish stance 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 often lead to chain reactions of sell-offs and increased price volatility.
Another recurring concern stems from the Ethereum Foundation's tendency to sell ETH near local price peaks. In a recent post on X, Lookonchain pointed out that the Ethereum Foundation sold 100 ETH on December 17. Following this sale, the price of ETH dropped by approximately 17%.
Further doubts have arisen regarding the supply issuance of Ethereum. A recent report by Binance Research emphasized that the relatively high issuance rate of ETH raises questions about its 'ultrasound money' narrative, which suggests that Ethereum is a deflationary asset.
Will Ethereum rebound?
Experienced cryptocurrency analyst Trader_XO stated that they purchased spot ETH at a price of $3,200 yesterday. The analyst added that they expect the price to undergo 'several weeks' of consolidation before ETH enters the next round of upward movement.
Meanwhile, cryptocurrency trader @CryptoShadowOff has identified a potential ascending triangle on ETH's monthly chart. According to their analysis, ETH may further decline to the $2,800 range before setting a new all-time high (ATH).
Market analyst CryptoBullet1 emphasized that ETH has never been this oversold on the 4-hour chart since August 5, indicating that a rebound may be imminent. As of the time of writing, ETH is trading at $3,400, down 6% in the last 24 hours.
