The world’s second-largest cryptocurrency finds itself at a pivotal moment. As Bitcoin intermittently notched fresh highs, Ethereum has been grappling with persistent selling pressure and a cautious investor base. Trading around $3,100, the asset’s price action in the coming days could determine whether it rallies into the new year or extends its corrective phase.
Institutional Capital Flows Defy Weak Price Action
Despite the subdued price performance, investment products tied to Ethereum continue to attract capital. Last week saw combined inflows into Ethereum ETFs reach approximately $209 million. This persistent institutional interest presents a contrasting narrative to the spot market’s weakness. However, these products are underperforming relative to XRP ETFs, which have reported uninterrupted inflows for 30 consecutive days.
Concurrently, the Total Value Locked (TVL) across the Ethereum ecosystem has declined from $90 billion in October to $70 billion, signaling a reduction in on-chain activity and capital deployment.
Technical Headwinds and Critical Price Zones
From a chart perspective, Ethereum remains constrained by a descending trendline originating from its November peak. Each recovery attempt has so far been rejected at this dynamic resistance. The area between $3,300 and $3,600 is particularly significant, as it houses the 200-day moving average and a major supply zone that has repeatedly attracted selling interest.
A sustained breakout above $3,400 is required to invalidate the current bearish structure. On the downside, the psychologically important $3,000 level is the immediate focal point. A break below this support could see ETH test the $2,900 zone, with the next major structural support lying between $2,500 and $2,600.
Liquidation Data Highlights Market Imbalance
Analysis of the Binance liquidation heatmap reveals a notable asymmetry in the market. A substantial cluster of short positions is stacked above the current price, especially between $3,400 and $3,700. Ethereum has thus far lacked the bullish momentum to trigger these liquidations, indicating an absence of aggressive buying.
Should investors sell immediately? Or is it worth buying Ethereum?
Below the current trading level, liquidation clusters are far less dense. The next significant concentration only appears between $2,600 and $2,700. This setup suggests a downward move might encounter less immediate buying pressure.
A slight positive can be found in on-chain behavior: selling pressure from long-term holders has recently eased. Between December 12th and 13th, the daily net selling volume decreased by roughly 8%. Such patterns often emerge during the later stages of a consolidation period.
Network Upgrade Encounters Minor Setback
Ethereum activated its “Fusaka” upgrade in early December, designed to enhance Layer-2 transaction processing. However, a software bug in the Prysm client caused temporary disruptions. Validators missed 248 out of 1,344 blocks, resulting in over $1 million in lost rewards and a temporary drop in network participation to 75%.
This incident has renewed discussions concerning client concentration. The Lighthouse client currently powers 51% of all validators, a dominance that presents a potential risk to the network’s decentralization.
Analyst Sentiment and Year-End Outlook
Market experts remain cautious about near-term prospects. Analysts like Augustine Fan of SignalPlus warn of potential continued weakness heading into year-end, noting, “Sentiment remains deeply negative, and the path of least resistance is to the downside.”
The upcoming sessions are likely to be directional. A daily close above $3,200 could provide an initial signal of a potential trend reversal. For a more convincing recovery, ETH would need to decisively conquer the $3,400 zone, which would open a path toward $4,000. Conversely, a sustained drop below $3,000 threatens a test of the $2,900 area and potentially the crucial $2,500 support level.
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