Market News

US Demand for Ethereum Declines, Raising Concerns of a Bull Trap

Ethereum (ETH) has recently slipped below the $3,800 mark, marking a cooling off after testing highs near $3,900 earlier this week.

Despite achieving over 50% monthly gains, the price has only risen 2% week-on-week, suggesting potential weaknesses in the rally.

The Coinbase Premium Index has plunged to -0.01, indicating a weaker buying interest from US institutions, which could impact Ethereum's rally.

Historically, a positive index correlates with strong purchases from US buyers, and this recent drop signals a notable demand gap.

The Chaikin Money Flow (CMF) reveals that while Ethereum's price has reached new highs, the buying pressure is declining, indicating weakening momentum.

Conversely, the On-Balance Volume (OBV) shows slight upward movement, which may mislead retail investors into a false sense of security regarding market strength.

The combination of these indicators suggests that, although price action appears robust, underlying demand is diminishing.

Currently, Ethereum is trading within an ascending wedge pattern, often associated with bearish trends due to slowing momentum.

For Ethereum's bearish sentiment to be reversed, it must sustain trading above the critical $4,024 resistance level.

If it fails to break above this threshold, a retest of support at $3,510 could be imminent, further testing market stability.