Ethereum (ETH) is facing a challenging climb back to the $3,900 level as market sentiment wanes and demand fizzles. Over the past week, Ether has fallen 11%, even after briefly reaching $3,400. This decline mirrors a broader correction in the Nasdaq index, which has erased gains from the previous two weeks.
Several factors contribute to this cautious outlook. Concerns about global economic growth have resurfaced following weak quarterly results from consumer-focused companies and renewed worries over high valuations in the artificial intelligence sector. The ongoing US government shutdown is also negatively impacting the economy, further dampening investor confidence.
Derivatives market data reflects this muted sentiment. Ether futures are trading at a 4% premium to spot markets, a figure unchanged from the previous week. Under normal market conditions, this premium typically ranges between 5% and 10% to account for the longer settlement period. The current low premium indicates a limited appetite for bullish positions, although it has not yet reached panic levels.
A recent University of Michigan survey revealed that US consumer sentiment expectations have plunged to their lowest levels ever. The survey, released Friday, pointed to the ongoing US government spending shutdown as a major cause of this decline.
Ether's recent underperformance compared to the broader crypto market adds to investor frustration. This suggests that factors beyond macroeconomic risks are influencing traders' cautious stance toward Ethereum. The total value locked on the Ethereum network has fallen to $74 billion, marking its lowest level in recent times.
Analyzing Ethereum's price action, it's evident that the cryptocurrency is navigating between critical liquidity zones. One analyst noted that ETH is sinking into a "giant cluster of resting bids" down to $3,900. A break and stabilization above the $4,400 level could signal a potential new all-time high in the coming days. However, a retest of the $3,900 level could attract buyers, potentially flushing out early long positions.
Despite the short-term challenges, some analysts remain optimistic about Ethereum's long-term outlook. On November 4th, ETH looked like it was pressing against resistance, riding a rising channel and approaching the all-time-high liquidity pocket. Support around the $3,800–$3,900 level has been defended, indicating base-building behavior. If buyers maintain control, a move towards $4,100 is likely, followed by a potential run at the previous all-time high.
However, momentum signals have been inconsistent, and spot demand has not fully materialized. Dips into the low $3,000s have found bids, but they lack aggression. While sentiment is not entirely broken, conviction remains thin.
Overall, Ethereum faces a complex path to reclaim the $3,900 level. Macroeconomic uncertainties, weak sentiment, and underperformance relative to the broader crypto market are creating headwinds. While technical analysis suggests potential upside targets, the lack of strong demand and the presence of significant resistance levels indicate that the journey will likely be arduous.
