Ethereum (ETH) extended its decline on Friday, falling more than 2% to trade just under the $1,900 mark as retail participation weakened. The drop reflects a broader reduction in leveraged trading, with investors pulling back exposure amid uncertain market conditions.
Derivatives Market Shows Caution
Ethereum's futures open interest (OI) has fallen 1.3% in the past 24 hours to $27.3 billion, after hitting a multi-month high of $29 billion earlier this week. The decline suggests traders are unwinding positions rather than adding new leverage.
Perpetual futures funding rates, which had remained mostly positive through July, turned negative on Thursday for the first time since late June. A negative funding rate indicates that short sellers are paying long traders, reflecting growing bearish sentiment. While leverage can amplify rallies, it also raises the risk of sharp liquidations if prices move unexpectedly.
Institutional Demand Holds Steady
Despite the price weakness, institutional interest in Ethereum remains resilient. US spot Ethereum ETFs recorded $14.9 million in net inflows on Thursday, marking four consecutive days of positive flows, according to CoinGlass. This suggests that institutional investors continue to accumulate ETH even as short-term momentum fades.
However, retail sentiment tells a different story. The Coinbase Premium Index, which tracks the price difference between Coinbase and other major exchanges, has stayed below zero for nearly three months. A negative premium signals weaker buying demand from US-based spot investors. Analysts view a sustained move back into positive territory as a key indicator of returning bullish sentiment.
Technical Resistance at 100-Day EMA
On the 4-hour chart, Ethereum remains above its 20-day exponential moving average (EMA) at $1,837 and the 50-day EMA at $1,829, providing near-term support. However, the 100-day EMA near $1,937 has repeatedly capped recovery attempts, acting as a major resistance level.
The Relative Strength Index (RSI) sits around 55, indicating moderate buying momentum without entering overbought territory. The MACD lines remain positive but risk turning lower if selling pressure persists.
If buyers regain momentum and push above immediate resistance at $1,909, ETH could target the 100-day EMA at $1,937. A daily close above that level would open the path toward $2,108 and $2,107. On the downside, a break below the 20-day and 50-day EMAs could send ETH toward the next support zone at $1,741. The structural support at $1,524 remains critical for bulls to defend to prevent a deeper correction.
For broader context, see our analysis on Bitcoin Slips Below $65,800: Geopolitical Tensions Fuel Deeper Correction Fears and Ethereum Bulls Eye Breakout Above 100-Day EMA as Exchange Outflows Surge.
This article is for informational purposes only and does not constitute financial advice.
