In recent days, the digital asset Ethereum (ETH) has shown troubling signs of vulnerability, with a marked drop in interest from U.S. investors that could send the token toward the $3,500 level.
Declining U.S. Demand
According to on-chain data, ETH’s demand from U.S.-based investors has taken a hit, both in spot markets and derivatives. One key indicator, the “Coinbase Premium Index,” dropped into negative territory at -2.8 % on Thursday, the first such occurrence since September 9, signalling that ETH is trading at a discount on U.S. exchange Coinbase relative to international peers.
Meanwhile, the spot ETFs focused on ETH in the U.S. have seen large outflows. Since October 8, roughly 158,374 ETH have exited U.S. ether spot ETFs, with a single day’s outflow reaching USD 184.2 million. The bulk of that outflow was from the ETHA fund of BlackRock.
On the futures side, U.S. investor sentiment also appears to be waning: The annualised basis in the U.S. exchange Chicago Mercantile Exchange (CME) for ETH futures with maturities of six months or more fell to just 3.0 %, one of the lowest levels since July 29.
In short: fewer buyers, more sellers, and caution on the part of U.S. investors suggest that momentum behind Ethereum may be fading—at least temporarily.
Whales Are Accumulating, But Does It Offset the Sentiment?
On a somewhat contrasting note, large ETH holders—whales managing between 10,000 and 100,000 ETH—appear to be quietly accumulating again. After reducing holdings in the prior week, these wallets added over 210,000 ETH between Sunday and Thursday.
The open interest in global ETH derivatives also ticked up—from a low of 11 million ETH last week to 12.4 million ETH on Thursday—before sliding slightly on Friday.
Analysts at Bernstein have pointed out that ETH may benefit over time as the assets secured on-chain continue to rise, and that ETH deserves to be regarded not just as a speculative token but as a reserve asset of the Ethereum network.
Thus, while sentiment among smaller U.S. retail and institutional players is turning cautious, the accumulation behaviour of whales and some structural network factors provide a partial counterbalance.
Technical Picture & Downside Risk
From a technical-analysis perspective, ETH is moving inside a downward channel after recently hitting support around the USD 3,700 level.
If ETH breaks below this support, the next target is around USD 3,470; failing that, a more serious drop toward about USD 2,850 cannot be ruled out.
On the upside, ETH would need to break above the upper boundary of its descending channel and challenge the key resistance around USD 4,800 to reverse this negative trend. But indicators show downside pressure is currently stronger: the RSI (Relative Strength Index) is trending downward, and the MACD (Moving Average Convergence Divergence) remains below neutral.
Macro & Sentiment Factors
The weakening in U.S. investor demand comes just as the Federal Reserve signalled hawkishness in its October meeting—even though it cut interest rates by 25 basis points. That combination of a rate cut with hawkish language suggests that liquidity conditions may not loosen substantially, perhaps weighing on risk assets such as cryptocurrencies.
In addition, risk-off sentiment appears to be rising in the crypto ecosystem, with investors shifting from accumulation mode into profit-taking and cautious positioning. As one analyst at CryptoQuant put it: the current phase “reflects profit-taking and more cautious positioning rather than accumulation.”
What This Means for Investors
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Short-term risk is elevated. With U.S. investor demand fading and market structure showing signs of stress, ETH may test its lower support zones in the coming days or weeks.
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Watch key levels. A break below ~USD 3,700 could open the way to ~USD 3,470 or even ~USD 2,850. Conversely, a break above ~USD 4,800 would signal a shift back to recovery mode.
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Keep an eye on on-chain flows. Tracking ETF flows, Coinbase premium, derivatives basis and whale accumulation may provide early signals of sentiment change.
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Macro environment matters. Crypto is still sensitive to global liquidity, risk appetite and U.S. monetary policy stance—even though it’s touted as a decentralized asset.
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Not an investment recommendation. As the original article emphasises, this is informational only and not financial advice. Do your own due diligence before making investment decisions.
In conclusion, while Ethereum still has structural positives—such as whale accumulation and strong on-chain fundamentals—the current combination of weak U.S. demand, a bearish technical setup and an uncertain macro backdrop makes a near-term drop toward the $3,500 zone a tangible possibility. Investors should stay alert to the signals emerging from both chain-data and market structure.
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