Ethereum remains entrenched in a corrective phase, displaying a recent trend of price compression rather than expansion. Current volatility levels have diminished, leading the market to rotate within strict technical boundaries.

Technical Analysis

Daily Insights

On the daily chart, ETH is confined to a clearly established range. The upper limit is dictated by a longstanding descending trendline that exhibits ongoing resistance. Each attempt to surpass this trendline has met with rejection, confirming that sellers remain active during price rallies instead of paving the way for a breakout.

On the downside, Ethereum maintains its position above a significant support level around $2.5K, which has repeatedly absorbed selling pressure in recent trades, thereby preventing a deeper descent. This scenario has led to Ethereum being effectively caught between the persistent resistance of the trendline and the static support level, resulting in a compression structure that indicates indecision.

As long as prices stay below the declining trendline and above the $2.5K support, a range-bound market is favored. A definitive closing outside this range will be necessary to transition from the current consolidation phase into the next directional movement.

Daily Chart

Short-Term Outlook on the 4-Hour Chart

Recent market movements on the 4-hour chart have illuminated the short-term trajectory for Ethereum. A preceding flag pattern developed after the asset reacted off local lows, but an attempt to break out was unsuccessful. The price dipped momentarily below the flag support before reversing quickly, depicting a false breakout.

This shortfall has shifted momentum back towards buyers, reigniting upward pressure. The failed breakout caused significant long positions to be trapped below the flag, leading to a notable rejection. The price has since moved back into the broader range structure without initiating a new bullish trend.

The resistance above the flag indicates that bullish momentum is limited in the current market. If Ethereum fails to regain ground above the broken structure with sustained strength, upward attempts are likely to be merely corrective and susceptible to rejection.

Overall, Ethereum’s signs point towards consolidation rather than expansion. The daily price remains compressed between the descending trendline and the $2.5K support, with the 4-hour framework confirming the failed bearish continuation. Until clearer market resolutions are established, the Ethereum market remains neutral to bearish.

4-Hour Chart

On-chain Analysis

While the broader cryptocurrency market exhibits volatility, Ethereum’s ETF data shows caution for the second-largest cryptocurrency. A wave of capital outflows within the week beginning December 15 has exerted significant selling pressure on ETH.

Latest reports indicate that Ethereum ETFs faced notable net outflows, particularly BlackRock’s Ethereum ETF (ETHA), which alone witnessed approximately $467M exiting the fund. Cumulative weekly outflows exceeded $600M, signaling a marked reduction in institutional interest in Ethereum at current valuation levels, with pricing situated near the $2.8K region.

The implications of these flows are critical. Persistently negative netflows at the start of the week weaken purchase liquidity. When substantial institutions begin the week by reducing exposure, Ethereum’s capability to sustain essential support levels diminishes.

In conclusion, the evident hesitation from institutions to invest in Ethereum at current pricing, prominently exhibited by the heavy outflows from BlackRock’s ETF, serves as a distinct warning. Until ETF inflows stabilize and revert to positive figures, Ethereum is likely to stay under strain, with a heightened risk of approaching lower support levels.

Onchain Analysis