ETH Struggles at Resistance, Downside Risk Increasing

Ethereum is trading below $2,200 after failing to break resistance earlier this week. Market sentiment turned cautious as tensions rose following Donald Trump’s remarks about possible further actions against Iran. This created pressure on risk assets, including ETH.

At the start of the week, sentiment was more positive. Markets were supported by hopes for a limited conflict and potential resolution, which pushed stocks and crypto higher, while oil prices eased. That optimism quickly faded with renewed threats of escalation. Iran’s leaders, such as Masoud Pezeshkian and Abbas Araghchi, responded firmly, keeping uncertainty elevated. As a result, investors shifted away from risk, boosting the dollar and oil prices, while crypto weakened.

Institutional demand remains weak. Spot ETH ETFs saw continued outflows this week, extending the broader trend of investors cutting exposure or staying out of the market. Without strong institutional buying, gains have struggled to hold.

Derivatives data also point to a bearish outlook. Funding rates are negative, indicating more traders are taking short positions. This reflects a lack of confidence in near-term price gains, and rallies are likely to face selling pressure.

Looking at longer timeframes, the trend remains bearish. ETH is trading below major weekly moving averages, and the price pattern continues to show lower highs. The current decline is smaller than the previous cycle’s drop, suggesting there could be further downside if selling persists.

On the 4-hour chart, ETH is moving sideways around $2,050 within a downward channel. Sellers are active between $2,100 and $2,200, while buyers are defending support around $1,980 to $1,930. Momentum is fading and price compression is occurring, which usually precedes a breakout.

A move below $2,000 could push the price toward $1,950 or lower. If price rises above $2,100, there might be a short bounce toward $2,200. Right now, ETH is stuck in a narrow range, but a breakout seems near, with sellers still holding a slight edge.

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