Ethereum Struggles to Maintain Momentum Above $4K Amid Bearish Pressure
Ethereum (ETH) continues to face significant resistance at the $4,000 mark, raising doubts among traders and analysts about the sustainability of its recent recovery. Despite favorable macroeconomic developments, such as a 0.25% interest rate cut by the U.S. Federal Reserve and the winding down of quantitative tightening, Ether has failed to gain traction. Market data points to a decline in on-chain activity, weak demand for futures contracts, and underwhelming ETF inflows—all of which contribute to a pessimistic outlook for ETH in the short term.
Over the past two weeks, ETH has hovered near the $4,000 level, recovering from an earlier sharp drop below $3,500. However, several attempts to reclaim and hold above this psychological resistance have been met with rejection. This pattern suggests that bullish momentum remains fragile, and without a meaningful catalyst, the price could slide back toward the $3,500-$3,700 range.
A key concern for market participants is the lack of enthusiasm in Ether futures markets. Currently, ETH futures are trading at only a 5% premium compared to the spot price — a level typically associated with neutral sentiment. In bullish conditions, this premium often ranges between 5% and 10%. The subdued futures activity indicates that leveraged traders are hesitant to take aggressive long positions, further weakening the case for a sustained rally.
Adding to the bearish narrative is the disappointing performance of U.S.-based spot Ethereum ETFs. Despite a net inflow of $380 million earlier this week, there was no meaningful price reaction, underscoring the lack of confidence among institutional investors. This tepid response casts doubt on previously optimistic projections that saw ETH reaching $10,000 in this market cycle.
On-chain metrics paint a similarly bleak picture. Ethereum network fees have declined to $5 million over the past seven days, representing a 16% drop compared to the previous week. This decrease reflects reduced user activity and lower demand for block space. In contrast, BNB Chain and Tron saw declines of 30% and 16% in fees respectively, but Tron interestingly registered a 100% increase in active addresses, suggesting a shift in user preference toward alternative chains.
Ethereum’s base layer also witnessed a 4% drop in active addresses, reinforcing concerns about diminishing user engagement. As a result, technical indicators on daily charts show ETH forming its third consecutive red candlestick—a clear sign of mounting selling pressure.
Analyst Ted Pillows highlighted that Ethereum has once again slipped below the $4,000 support level, despite positive macro developments including the Fed’s policy easing and renewed U.S.-China trade dialogue. According to Pillows, if ETH fails to find support around $3,800, the next likely stop is the $3,500-$3,700 demand zone, with an ultimate downside target near $3,354—the low observed back in early August.
However, not all analysts are bearish. FibonacciTrading suggests that a dip to $3,300 could still be considered a healthy correction within the larger uptrend, so long as ETH remains above the EMA cloud on the weekly chart. Similarly, analyst Cactus maintains a cautiously optimistic view, asserting that as long as the $3,800–$4,200 support range holds, a strong fourth quarter is still plausible.
For ETH bulls to regain control, breaking above the 50-day simple moving average (SMA) at $4,200 is essential. This would signal a return in upward momentum and open the path toward key resistance levels at $4,500 and eventually the all-time highs above $5,000.
Looking deeper into the market structure, the lack of retail participation is becoming increasingly evident. After the Ethereum Merge and subsequent Shanghai upgrade, hopes were high for increased network utility and user activity. However, much of that enthusiasm has faded as transaction volumes stagnate and gas fees remain low, reducing miner incentive and network security.
Institutional interest, once seen as a driving force behind ETH’s surge, has also cooled. Hedge funds and asset managers appear to be reallocating capital toward Bitcoin and more traditional assets amid global macroeconomic uncertainty. This shift in sentiment diminishes Ethereum’s appeal as a high-growth investment vehicle in the near term.
Moreover, the rise of layer-2 scaling solutions like Arbitrum, Optimism, and Base—while beneficial for Ethereum’s long-term scalability—has had the adverse effect of reducing activity on the Ethereum mainnet. As more users migrate to these cost-effective alternatives, the core network sees less fee generation and lower transaction counts, further affecting on-chain metrics used by analysts to gauge market sentiment.
Regulatory headwinds are also playing a role. The lack of clarity around Ethereum’s classification—as a commodity or security—continues to deter large-scale institutional participation. Until clearer guidelines emerge, especially from U.S. regulators, many investors will likely remain on the sidelines.
In conclusion, Ethereum’s inability to hold above the $4,000 level is not merely a technical issue, but a reflection of broader bearish sentiment fueled by weak on-chain fundamentals, tepid demand for futures, and diminishing institutional engagement. While some analysts remain hopeful for a late-year rally, the current data leans toward caution. For a sustainable uptrend to resume, ETH needs to reclaim $4,200 and demonstrate renewed network activity, stronger ETF inflows, and increased futures demand. Until then, traders should prepare for potential volatility and a possible retest of the $3,500 support zone.