The Forces Keeping Ethereum Range-Bound
Ethereum’s struggle to break and hold above the $4,000 level is a technical and psychological battle. The area between $4,600 and $4,650 has solidified as a major technical resistance zone, aligning with key moving averages that have repeatedly capped upward momentum. Each test of this level has been met with selling pressure, preventing a decisive breakout.
This technical struggle is underpinned by a significant on-chain dynamic known as “supply walls”. These are price zones where a large number of coins were previously bought, creating a cluster of potential sellers looking to break even or take profits as the price returns to those levels. Your observation of these walls is a key piece of the puzzle, explaining why rallies tend to falter at specific prices.
Beyond the charts, market dynamics have also played a role. While Ethereum enjoyed strong institutional inflows earlier in the year, recent data suggests some fragility in this demand. Although prediction markets remain optimistic about the long term, recent ETF flows have shown periods of net outflows, indicating a more cautious short-term stance from some institutional players. This has contributed to a bearish shift in momentum indicators, with the weekly MACD showing a decline in buying pressure.
A Glimmer of Long-Term Confidence
Despite the short-term headwinds, it’s important to note that the long-term narrative for Ethereum hasn’t been entirely undone. Underlying the current volatility are signs of continued institutional confidence. A substantial portion of the ETH supply, over 29%, is now staked in the network’s proof-of-stake system. This long-term locking of coins reduces the circulating supply and indicates a commitment to the network’s security and future, creating a potential foundation for scarcity.
The Path to a Breakout
For traders and investors, the immediate future hinges on a few key developments. The most critical level to watch on the upside is a sustained daily close above $4,340, which would be a strong signal that the bulls are overcoming the current resistance. If this happens, the next significant targets would be $4,520, followed by a retest of the all-time high near $4,960.
Conversely, if selling pressure intensifies, the market will be watching the support levels. A breakdown below $4,350 could trigger a move toward $4,100, with $3,785 being a crucial level to hold to prevent a deeper correction.
