Recently, Ethereum (ETH) faced rejection again at the key resistance level of $4,000, marking the third failed rebound since March 2024. Currently, ETH's price stabilizes around $3,400, having dropped about 6.7% in the past 24 hours. Although ETH has gained 47% year-to-date, it still lags behind other major cryptocurrencies like Bitcoin (BTC), Solana (SOL), and XRP. Let's analyze the reasons behind this and the potential future trends for ETH.

Reasons for resistance: Market sentiment and supply issues

  1. Differences in brand recognition and market sentiment
    Compared to Bitcoin, Ethereum has relatively weak brand recognition. Despite the launch of the spot ETH exchange-traded fund (ETF) in August, its market response has been tepid, failing to deliver the expected price increase. Data shows that the total net assets of the spot ETH ETF are$11.98 billion, while the net assets of the spot BTC ETF are$109.66 billion, nearly ten times that of ETH.
    Additionally, the social sentiment around ETH has dropped to its lowest point in a year, with analyst Ali Martinez noting that despite this, such low sentiment may actually present a bullish opportunity for Ethereum, as historical data indicates that negative sentiment sometimes precedes reversals.

  2. Capital outflows and pressure from the futures market
    Latest data shows that the spot ETH ETF saw capital outflows exceeding$60 millionyesterday, marking the largest single-day outflow since November. At the same time, the premium in the futures market has turned negative, indicating a strengthening bearish sentiment among futures traders. Since December 9, ETH has experienced$299 millionin liquidations, leading to a chain reaction of sell-offs and price fluctuations.

  3. Concerns about Ethereum Foundation's supply
    The Ethereum Foundation tends to sell ETH at price peaks, raising market concerns about an increase in ETH supply. According to data from Lookonchain, the foundation sold100 ETH, causing the price to drop by about17%. This supply pressure may further suppress ETH price increases.

  4. Questioning the claim of 'ultrasound money'
    The issuance rate of Ethereum has also become a focal point for the market. A report by Binance Research highlights that ETH's higher issuance rate casts doubt on the claim of 'ultrasound money' (i.e., deflationary asset), further affecting market investment sentiment.

Will ETH rebound in the future?

Despite facing multiple challenges currently, some analysts believe ETH has the potential for a rebound. Here are some key points:

  • Possible rebound after short-term consolidation
    Analyst @Trader_XO pointed out that they bought spot ETH near$3,200, expecting ETH to experience 'several weeks' of consolidation before the next rally.

  • Ascending triangle pattern
    Trader @CryptoShadowOff identified a potential ascending triangle on ETH's monthly chart, suggesting that ETH may further drop to$2,800range before reaching a new historical high.

  • Oversold signal
    Market analyst @CryptoBullet1 emphasized that ETH has shown the largest oversold condition on the 4-hour chart since August, which may indicate that a rebound is imminent.

The future potential and challenges of ETH

Although ETH faces strong resistance at the current price level and is challenged by low brand recognition, supply pressure, and fluctuations in market sentiment, potential signs of a rebound should not be overlooked. Analysts generally believe that ETH may experience consolidation in the coming weeks, followed by a price rebound. For investors, observing whether ETH can break through the key resistance level of $4,000 and changes in market sentiment will be crucial for future trends.

Do you think ETH will break through $4,000, or will it continue to fluctuate in the current range? Feel free to share your views in the comments!
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