Ethereum (ETH) has recently experienced a period of cooling volatility after failing to break above the $4,000 resistance level. This rejection near the psychological level has raised concerns about a potential selloff, as on-chain data indicates weakening buying pressure and low volatility. Many traders see this rejection as a signal to take profits, especially following ETH’s steady climb in recent weeks.
In the last 24 hours, Ethereum has witnessed a spike in price swings, with approximately $124.5 million worth of ETH positions being liquidated, impacting both buyers and sellers. This price drop comes after a period of decreased volatility, with Ethereum’s volatility dropping from a high of 53.9% to 47.6%. Additionally, the activity from large investors, also known as “whales,” has decreased significantly, with the total value of large transactions plummeting from $21.3 billion to $5.9 billion in just one week.
The slowdown in key metrics has resulted in reduced buying interest, as fewer long-term holders are adding to their positions. However, despite this, Ethereum spot ETFs have seen strong inflows, recording $452 million in positive netflows on July 25 alone. Institutional interest remains high, supported by Ethereum-focused companies and their stock market performance, indicating that while retail investors may be cooling off, institutional demand could help drive ETH higher in the long run.
Although short-term buying has slowed and volatility has dipped, the bigger picture still points to a bullish outlook for Ethereum in the days ahead.
Looking at the price action, Ethereum is currently facing strong resistance from sellers around the $4,000 level. However, buyers are not giving up much ground, with ETH price trading at $3,807 at the time of writing. If Ethereum manages to break above $4,000, it could potentially test the next major level at $4,100, followed by a rally towards $4,900. On the downside, the first support level is at the EMA20 trend line, with the next likely stop around $3,500.
The RSI is dropping quickly and is currently around 51, giving sellers an edge. However, the recent price dip has attracted significant buying interest. If Ethereum bounces back above the 23.6% Fibonacci level, there is a good chance that the price could see a strong recovery in the near future.