Bearish Signal Emerges For Ethereum As US Spot Demand Fades

Overview

Ethereum is currently facing challenges in maintaining its price above a significant resistance level, retracing from a critical threshold. The ongoing struggle to establish a sustainable recovery is compounded by a notable decline in demand from US institutional investors, as indicated by recent on-chain data.

Ethereum’s Recent Price Action

Ethereum has recently experienced a pullback from the $3,300 resistance level, moving back toward the $3,100 area. This retreat underscores the market’s difficulty in building a robust recovery, with bullish momentum diminishing near essential technical markers. While buyers have managed to stave off a more profound correction for the time being, their failure to reclaim higher price levels has created a cautious sentiment in the market.

According to data from CryptoQuant, Ethereum’s Coinbase Premium Gap has sharply declined into negative territory. This metric serves as a proxy for US institutional demand, reflecting the price discrepancy between Coinbase and offshore exchanges. A negative reading indicates that buying interest from US investors is lagging behind global activity, decreasing the likelihood of a strong upside continuation. Historically, sustained rallies in Ethereum have been associated with a positive Coinbase Premium, which signifies consistent accumulation by institutional players.

The current situation presents a structural challenge for bullish investors, as the divergence between attempts to stabilize price and the weakening demand from US-based buyers creates headwinds. As long as the Coinbase Premium remains negative, the prospect of reclaiming the $3,300 level appears increasingly difficult.

Coinbase Premium Weakness Undermines Recovery Attempt

The deterioration of the Coinbase Premium Gap is a significant indicator of the cautious outlook for Ethereum. Analysis from CryptoQuant reveals that the gap has reached its most negative level in nearly a year, with the 14-day moving average falling around -2.3. This indicates that Ethereum prices on Coinbase are trading at a notable discount compared to those on Binance. The implications of this divergence are critical because Coinbase activity is often viewed as a measure of US institutional demand.

When the Coinbase Premium is deeply negative, it typically suggests that US buyers are either stepping back or distributing their holdings rather than accumulating. This trend is evident as Ethereum remains constrained below the $3,300 resistance zone, following a sharp decline from an earlier peak. The combination of weak price movements and declining Coinbase demand signals a bearish divergence. The historical context shows that strong rallies in Ethereum have usually required a positive Coinbase Premium, reflecting consistent inflows from US investors. Until this gap narrows and shifts back to a positive reading, Ethereum’s potential for upward movement appears limited.

Ethereum’s Technical Landscape

Ethereum’s price remains fragile after its failure to reclaim the $3,300 resistance. Currently, it is trading near the $3,100–$3,150 range, a level that has acted as a short-term pivot but has not attracted robust buying support. The broader market structure indicates a corrective phase rather than a confirmed trend reversal.

From a technical standpoint, Ethereum is trading below key moving averages, with the 50-day moving average trending downward and capping upside attempts. The 100-day and 200-day moving averages are situated higher, contributing to a heavy overhead supply zone between approximately $3,300 and $3,600. Each rally into this area has faced renewed selling pressure, indicating persistent distribution.

The sequence of lower highs since the October peak remains intact, and while the price has stabilized compared to the sharp sell-off in November, the current rebound resembles consolidation within a bearish framework rather than the beginning of an impulsive move. Volume during recent advances has also moderated, suggesting a lack of strong conviction behind the price increases.

From Author

The current state of Ethereum reflects a complex interplay between technical resistance, market sentiment, and institutional demand. The inability to break through significant resistance levels, coupled with declining interest from US investors, highlights the challenges facing Ethereum as it navigates its recovery. Traders and investors should remain vigilant and monitor these developments closely.

Impact on the Crypto Market

• Ethereum’s struggle to maintain price above critical resistance levels may influence overall market sentiment.
• The negative Coinbase Premium could indicate reduced interest from US institutional investors, potentially impacting other cryptocurrencies.
• A sustained inability to reclaim higher price levels may lead to increased caution among traders, affecting market volatility.
• The current bearish divergence between price attempts and declining demand highlights the need for careful risk management in trading strategies.
• The broader crypto market may experience a ripple effect if Ethereum continues to struggle, particularly given its prominence in the space.