The major trends in Altcoin Ethereum lie down in early September as the market tried to recover from the sudden revision in August. However, the Bears gained the advantage on September 12th, and then forced ETH to replied. ETH traded at $4,113 at press time and has since dropped by almost 15%.
Coins will face headwind installations in October as broader sentiments worsen, users demand beyond the Ethereum network, and institutional investors pull back.
ETH supply will climb as demand slows
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Ethereum’s circular supply has skyrocketed over the past month, according to on-chain data. According to UltrasoundMoney data, 76,488.71 ETH has been added to the publicly available coins.
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Ethereum’s circular supply increases as user activity decreases. This reduces the burn rate of Layer 1 blockchain.
Generally, as more users trade and engage in Ethereum, the burn rate (a measure of ETH tokens permanently removed from circulation) increases, and a dynamic contribution to the deflationary supply of ether.
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However, when user activity on the network decreases, its burn rate also increases sharply, with many coins circulating and adding a circulating supply.
ETH faces a bearish bias in climbing, and there is no matching demand to absorb the increased supply.
Spot ETH ETFS records sharp spills
The decline in institutional appetite for ETH also points to a bearish outlook heading towards October. According to SoSovalue, the ETH-focused fund leakage reached $389 million this month. This is the largest monthly capital outlet since March.
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This is important as ETH prices are strongly correlated with ETF inflows. So, when these influxes immerse, it shows that convictions decline amongst the institutional players. If this trend continues unabated, it could affect the price performance of the coin in the coming weeks.
The lack of institutional interest could also emphasize retail participation. Without the confidence and liquidity that large players bring, retail investors may refuse to take over positions or commit capital, which will deter ETH performance in the coming weeks.
Weak Demand Threats $4,000 in Support
ETH/USD Measurements from the daily chart confirm that participation in the spot market is also weakening. Its balance volume (OBV) indicator has been on the decline since September 12th, indicating a decline in buyer demand.
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obv tracks cumulative trading volume by adding volumes on the up day and subtracting the down day. As OBV rises, buyers are increasing prices with strong volume support.
Conversely, a decrease in OBVs like ETH suggests that sales pressure outweighs buying activity. This amplifies the downsides in ETH prices next month.
If buy-side pressure continues to fade, Altcoin could fall below $4,000 and fall to $3,875.
On the other hand, if emotions improve and surge, the price of ETH can gain some strength, infringe resistance at $4,211, and rise to $4,497.
