Ethereum Faces Resistance at $4,500 Amid Weakening Market Demand
Since reaching an all-time high near $4,950 in mid-August, Ethereum (ETH) has encountered persistent resistance around the $4,500 level, failing to sustain a breakout despite repeated attempts. The price has formed a series of lower highs and lower lows on daily charts, indicating waning bullish momentum.
Spot Buying Weakness and ETF Outflows Signal Diminished Demand
One key factor limiting Ether’s upside is a notable decline in spot buying activity. The spot volume delta metric, which captures the net difference between buying and selling volumes on exchanges, has been negative during the recent consolidation phase. This suggests that buyer interest is insufficient to fuel a sustained price rally.
Compounding this, spot Ethereum ETFs have experienced significant outflows. Data from SoSoValue reveals that last week alone these products shed approximately $787.6 million, including $446.8 million in outflows on Friday. This reduction in institutional and retail investor inflows undermines the potential for strong upward price pressure.
Futures Market Shows Reduced Leverage and Participation
Ethereum futures open interest (OI), which measures the total number of outstanding contracts across exchanges like CME, Binance, and Bybit, has fallen sharply by 18% since an all-time high of $70 billion on August 23, now standing near $58 billion. Lower open interest typically signals reduced leverage and less speculative engagement, possibly reflecting diminished bullish sentiment in the market.
Network Fee Revenue Declines Following Dencun Upgrade
Ethereum’s network fee revenue, a key indicator of on-chain activity and token burn deflationary pressure, dropped by roughly 44% in August to $14.1 million from July’s $25.6 million, despite the price hitting new highs earlier in the month. This decline correlates with a roughly 10% decrease in network fees over the past 30 days, influenced by the March 2024 Dencun upgrade which lowered transaction costs for layer-2 scaling solutions. Reduced fee revenue may weaken Ether’s deflationary dynamics and price support.
Technical Outlook: Descending Triangle Points to Potential $3,550 Correction
Technically, Ethereum’s price action since mid-August has formed a descending triangle pattern—a flat support line near $4,200 combined with a downward sloping resistance. This formation is often interpreted as a bearish reversal signal following an uptrend. A decisive daily close below $4,200 could trigger a downside move toward the pattern’s target near $3,550, representing an 18% decline from current levels.
Some analysts, including trader Ted Pillows, suggest the possibility of a retest of the $3,800 to $3,900 zone before a potential rebound, noting that ETH remains supported above $4,200 for now. Additionally, a rebound area near $3,745 has been cited if the $4,250 support fails.
Overall, Ethereum’s price trajectory hinges on renewed buying interest to overcome resistance and stabilize above key support levels. Without fresh demand, the risk of a deeper pullback intensifies.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Trading cryptocurrencies involves risk and readers should conduct their own research before making investment decisions.
FinOracleAI — Market View
Ethereum’s inability to breach the $4,500 resistance, combined with declining spot buying, significant ETF outflows, and falling futures open interest, points to weakening bullish momentum. The reduced network fee revenue further undermines price support by impacting deflationary mechanisms. These factors collectively increase the likelihood of a correction toward the $3,550 technical target in the near term. Market participants should monitor spot buying volumes and ETF flow reversals as key indicators for a potential trend shift.
Impact: negative
