Ethereum’s market sentiment continues to struggle following last Friday’s market crash, despite gradual signs of broader market improvement.
As institutional investors reduce participation, spot market participants have also trimmed their holdings. This could result in continued consolidation or a definitive breakdown of the critical $4,000 resistance level around which the coin currently trades.
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Ethereum Market Hits Pause Amid Record ETF Redemptions
Ethereum-backed exchange-traded funds (ETFs) have faced significant outflows since the market-wide liquidation event last Friday. Data from SosoValue reveals that these funds recorded an alarming $428.52 million in outflows on Monday alone.
Leading the charge on these outflows was BlackRock’s iShares Ethereum Trust (ETHA), which saw a staggering $310.13 million in redemptions. Following closely were Grayscale’s Ethereum Trust (ETHE) and Fidelity’s Ethereum Fund (FETH), with outflows of $20.99 million and $19.12 million, respectively. Even other players like Bitwise’s Ethereum ETF (ETHW) and VanEck’s Ethereum ETF (ETHV) faced declines of $12.18 million and $9.34 million.
According to figures from SosoValue, these outflows represent the largest single-day capital exit from Ethereum ETFs since August 4. This notable decline in institutional interest is likely to further lower market sentiment toward Ethereum, potentially adding to downward pressure on its price and hampering any chance of recovery in the short term.
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Bearish Signals Mount for Ethereum Amid Technical Weakness
Technical analysis on the ETH/USD daily chart suggests a challenging scenario for Ethereum. The altcoin is currently trading below its Super Trend indicator, which now serves as dynamic resistance at $4,561. In contrast, ETH is trading significantly lower, around $3,986.
The Super Trend indicator is crucial for traders as it helps identify the direction of the market by placing a line above or below the price chart based on volatility. When the price trades above this line, it signifies a bullish trend. Conversely, trading below this line, as Ethereum currently is, signifies a bearish trend. This situation warns traders that downward momentum could persist, complicating Ethereum’s chances of regaining its footing in the near term.
Bears Target Lower Levels While Buyers Wait
The absence of bullish sentiment could lead Ethereum to breach the critical $4,000 price point, possibly dropping to $3,626. Should this support level weaken, it could open the door for a more significant decline toward $3,215.
However, a resurgence in demand for Ethereum could challenge this grim outlook. In such a scenario, the coin’s price might rally back to test the $4,211 level, suggesting that investors are still keeping a close watch on market trends and sentiment as they navigate this tumultuous period.