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Due to yesterday's cryptocurrency market crash, ethereum (eth) has now faced rejection at the key $4,000 resistance level three times since March 2024. The second-largest cryptocurrency by reported market cap is now trading on the level of $3,400, 6.7% less in the past 24 hours.
What's Behind ethereum's Disappointing Price Performance?
While eth has posted a respectable 47% year-to-date (YTD) gain, it has been surpassed by other major cryptocurrencies such as bitcoin (btc), Solana (SOL), and XRP, which have posted significantly higher returns in the year. same period. . Several factors appear to be holding back ethereum's price momentum.
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One contributing factor is ethereum's comparatively weaker brand recognition versus bitcoin. This was highlighted by the dull response to the launch of spot eth exchange-traded funds (ETFs) in August. The introduction of these ETFs failed to generate any significant price movement for eth.
<a target="_blank" href="https://sosovalue.com/assets/etf/us-eth-spot” target=”_blank” rel=”nofollow”>Data Furthermore, it reveals a significant disparity in investor interest between the two assets. Total net assets held in US Spot eth ETFs currently stand at $11.98 billion. By contrast, btc spot ETFs hold $109.66 billion, almost ten times as much.
Additionally, there were over $60 million in outflows from spot eth ETFs yesterday, marking the largest single-day outflow since November 19. crypto analyst Ali Martínez noted that social sentiment around eth has increased. reached its lowest point in a year. However, based on historical trends, this could, paradoxically, signal a bullish opportunity for ethereum.
Futures traders have also turned bearish on eth as the aggregate premium for futures positions turned negative for the first time since November 6. The market crash triggered ethereum's largest liquidation event since December 9, with $299 million liquidated in a single day. These large-scale liquidations often lead to cascading sell-offs and increased price volatility.
Another recurring concern arises from the ethereum Foundation's tendency to sell eth near local price peaks. In a recent x <a target="_blank" href="https://x.com/lookonchain/status/1870009192515547182″ target=”_blank” rel=”nofollow”>mailLookonchain noted that the ethereum Foundation sold 100 eth on December 17. After this sale, the price of eth fell by approximately 17%.
Increased skepticism surrounds the ethereum offering issuance. A recent report from Binance Research highlighted The fact that eth's relatively high issuance rate raises questions about its “ultrasonic money” narrative, which suggests ethereum is a deflationary asset.
Is ethereum Ready for a Bounce?
Experienced crypto Analyst @Trader_XO <a target="_blank" href="https://x.com/Trader_XO/status/1869912541247484296″ target=”_blank” rel=”nofollow”>fixed who yesterday bought eth spot at the $3,200 price level. The analyst added that they expect “a few good weeks” of price consolidation before eth's next ascent.
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Meanwhile, cryptocurrency trader @CryptoShadowOff identified a possible ascending triangle formation on the monthly chart of eth. According to their analysis, eth could fall further to the $2,800 range before aim a new all-time high (ATH).
Market analyst @CryptoBullet1 <a target="_blank" href="https://x.com/CryptoBullet1/status/1870081656654061720″ target=”_blank” rel=”nofollow”>emphasized That on the 4-hour chart, eth has not been this oversold since August 5, indicating that a bounce may be on the horizon. At press time, eth is trading at $3,400, down 6% in the last 24 hours.
Featured image from Unsplash, charts from Coinglass, x and Tradingview.com
