Ethereum has been facing significant volatility as it tries to surpass the psychological resistance level of $4,000. Despite multiple attempts, Ethereum has struggled to maintain its position above this level. The cryptocurrency has experienced fluctuations, reaching a peak of $4,077 on December 6 but quickly dropping below the critical level. This ongoing struggle highlights the challenges Ethereum faces in establishing stability in the current market environment.
An analyst suggests that $3,000 has become a psychological support level for Ethereum, which it last reached on November 9. Prior to that, Ethereum had been trading below this level since early August. The analyst predicts that Ethereum may consolidate within the range of $3,000 to $4,000 in the near term. However, there is a possibility of a further decline of more than 10% from the current price of approximately $3,466, potentially approaching the $3,000 region. This scenario raises questions about whether Ethereum could form a bottom in this area, which might lead to the development of an inverse head and shoulders pattern—a technical indicator that could signal a reversal in trend direction.
Several factors are influencing Ethereum's price dynamics, including a decrease in supply on cryptocurrency exchanges. Data from CryptoQuant shows that Ethereum balances on exchanges have reached an 8.5-year low, with only 9.2 million ETH available, reflecting a nearly 10% decline over the past year. This tightening supply could create upward pressure on prices, especially if demand remains strong.
Analysts are also optimistic about the potential impact of spot Ether exchange-traded funds (ETFs) on Ethereum's price momentum. Since their launch in the United States on July 23, spot Ether ETFs have accumulated approximately $2.43 billion in inflows. This trend is expected to continue, particularly if regulatory bodies allow these funds to generate yields through staking. The growing interest in Ether ETFs suggests that institutional investors may be increasingly looking to gain exposure to Ethereum, which could further strengthen its market position.
Looking ahead, asset manager VanEck projects that Ethereum's spot price could reach $6,000 by the fourth quarter of 2025. This projection is based on the assumption that the momentum generated by spot Ether ETFs will follow the performance of Bitcoin ETFs, which have seen significant inflows since their introduction. However, initial inflows for Ether ETFs have been relatively weak compared to Bitcoin, leading to skepticism about Ethereum's ability to surpass its all-time high of $5,000 by the end of the year.
Despite these challenges, the sentiment surrounding Ethereum remains cautiously optimistic. Analysts are closely monitoring developments in the ETF space and broader market trends that could influence Ethereum's price trajectory. The interplay between supply dynamics, institutional interest, and market sentiment will be crucial in determining whether Ethereum can break through its current resistance levels and establish a more stable price range in the coming months.