Ethereum market sentiment remains subdued following last Friday’s market crash, despite gradual signs of broader market improvement.
As institutional investors reduce their participation, spot market participants are also reducing their holdings. This could result in continued consolidation or a definitive collapse of the critical $4,000 resistance level that the coin is currently trading at.
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Ethereum market pauses amid record ETF redemptions
Exchange-traded funds (ETFs) backed by ETH have experienced significant outflows since last Friday’s market-wide liquidation event. Those funds recorded outflows of $428.52 million on Monday, according to SosoValue data.
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BlackRock’s iShares Ethereum Trust (ETHA) led ETF outflows with $310.13 million in redemptions, followed by Grayscale’s Ethereum Trust (ETHE) with $20.99 million and Fidelity’s Ethereum Fund (FETH) with $19.12 million.
Bitwise Ethereum ETF (ETHW) and VanEck Ethereum ETF (ETHV) posted smaller declines on the same day, at $12.18 million and $9.34 million, respectively.
Monday’s outflow was the largest single-day outflow from these funds since Aug. 4, according to the data provider, and highlighted the decline in institutional investor interest following the liquidation event.
This trend could further weaken market sentiment towards the altcoin, further increase downward pressure on the price, and limit the coin’s ability to recover in the short term.
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Bearish signals emerge for Ethereum amid technical weakness
Readings from the ETH/USD daily chart show that the altcoin is trading below the supertrend indicator, currently acting as a dynamic resistance level at $4,561. For context, ETH is currently trading well below this level at $3,986.
The Super Trend Indicator helps traders identify the direction of the market by placing a line above or below the price chart based on the volatility of the asset.
When the price of an asset is trading above the super trend line, it indicates a bullish trend, indicating that the market is trending upward and buying pressure is prevailing.
Conversely, similar to ETH, if an asset trades below this line, it indicates that the market is in bearish control. Traders typically interpret positions below the supertrend as a warning that the downward momentum will continue and that ETH may find it difficult to regain momentum in the short term.
Bears target lower levels while buyers wait
If bullish sentiment remains elusive, ETH could extend its decline below the key price level of $4,000 and fall to $3,626. If this level weakens, there is a possibility of further decline towards $3,215.
However, a pick-up in new demand for major altcoins could invalidate this bearish outlook. In that scenario, the coin’s price could rise to $4,211.
