Why is Ethereum price failing to break $4.5K?
News Summary
Ethereum (ETH) price has failed to break the $4,500 resistance level, forming a series of lower highs and lower lows on the daily chart since hitting an all-time high of $4,950 on August 14. This is attributed to declining spot buying, continuous outflows from spot Ethereum ETFs (totaling -$787.6 million last week), and an 18% drop in futures open interest to $58 billion due to decreased leverage demand. Furthermore, Ethereum network activity has slumped, with network revenue (share of fees accruing to ETH holders from token burns) falling approximately 44% to $14.1 million in August, despite the price hitting new highs. This decline is partly due to the Dencun upgrade in March 2024, which lowered transaction fees for Layer-2 scaling networks, impacting ETH's deflationary mechanism. Technical analysis indicates ETH is forming a descending triangle pattern, potentially signaling a drop to $3,550, an 18% decline from current levels. While some analysts suggest a rebound could occur around $3,800-$3,900 or $3,745, current market sentiment reflects insufficient buying pressure.
Background
Ethereum is the second-largest cryptocurrency by market capitalization, with its ecosystem dominating the decentralized finance (DeFi) and non-fungible token (NFT) sectors. On August 14, 2025, Ethereum's price reached an all-time high of $4,950, having rallied 240% since April. However, market interest and demand for Ethereum are undergoing shifts. The introduction of spot Ethereum ETFs, designed to offer investors exposure to ETH price movements without direct ownership, provides a key metric for institutional and retail demand. Furthermore, the Dencun upgrade, implemented in March 2024, aimed to enhance Ethereum network scalability and efficiency, particularly by reducing transaction fees for Layer-2 networks, which may also impact ETH's economic model and value capture mechanisms in the long run.
In-Depth AI Insights
Is Ethereum's current struggle a mere short-term correction or a more profound shift in market sentiment? This appears to be more than a simple short-term correction; it's a confluence of factors leading to a shift in market sentiment. Sustained outflows from spot ETFs suggest institutional and some retail investors are reducing exposure or taking profits, often signaling a wane in long-term bullish momentum. The significant drop in futures open interest also reflects a cooling of market leverage and speculative fervor. Crucially, the structural decline in network revenue, even as prices hit new highs, may prompt investors to re-evaluate Ethereum's intrinsic value capture capabilities, potentially indicating more persistent demand weakness. How has the Dencun upgrade fundamentally altered Ethereum's investment narrative, and what does this imply for long-term holders? The Dencun upgrade, by significantly lowering Layer-2 network transaction fees, enhances the overall usability and scalability of the Ethereum ecosystem but directly diminishes mainnet fee revenue, thereby impacting ETH's deflationary mechanism. This challenges the