Ethereum, the second-largest cryptocurrency by market capitalization, continued to show lackluster performance as it hovered around the $2,000 mark.
This is the first time since March to May 2025 that the price has revisited this range, indicating a 60-day period of consolidation. The market’s current lack of conviction and overall subdued structure are contributing factors to this revisit.
The current market conditions bear resemblance to previous cycles.
Although indicators suggest that a cooling-off phase may be nearing its end, the market’s response remains uncertain. The possibility of further decline cannot be ruled out.
Ethereum’s Cooling-Off Phase
Recent analysis indicates that ETH is undergoing a cooling-off phase, typically associated with potential price rebounds in various cycles.
This phase is measured using the Market Temperature metric, which incorporates indicators such as Market Value to Realized Value (MVRV) Z-score, Net Unrealized Profit/Loss (NUPL), and Realized Value to Transaction (RVT) Ratio.
The metric indicates a cooling-off phase when it drops to or below the 0 level.
Currently, Ethereum’s Market Temperature is slightly above zero, suggesting that while the market is cooling, there is still potential for further decline before a sustainable recovery occurs.
Source: Alphractal
Alphratal commented on the implications of trading within this zone:
“These zones reflect periods where unrealized profits are reduced, valuation becomes more balanced, and emotional excess fades from the market.”
Historically, such conditions have acted as growth catalysts.
However, recoveries are not immediate. Markets often require time to regain conviction before a rally can materialize. During this period, ETH may trade sideways or experience downward movement.
Weak Demand Persists
Demand remains subdued, indicating that ETH is likely to continue trading near the lower end of its range. Sentiment is cautious in both institutional and spot markets.
U.S. Spot Ethereum exchange-traded funds (ETFs) recently recorded one of their lowest inflow days since inception, absorbing only $10.26 million worth of ETH from the market according to SoSoValue.
While the inflow could be seen as mildly positive, the low magnitude indicates fragile bullish sentiment.
Source: SoSoValue
February saw minimal positive inflows, with only $57.05 million entering the market, falling short of the average net inflow during stronger demand periods.
Spot market activity reflects this weakness.
Currently, Exchange Netflows show approximately $28 million of Ethereum purchased, with the previous session recording $23 million in net selling pressure, offsetting some of the demand.
The lack of strong buying interest continues to impact price action, hindering Ethereum’s ability to benefit from the cooling-off phase associated with potential recovery.
Shifting Supply Dynamics
Recent reports highlight changing supply dynamics on Ethereum exchanges.
Exchange reserves have been declining, along with a decrease in ETH depositing addresses and transaction counts. Reduced exchange supply can support bullish scenarios by limiting sell-side liquidity.
However, supply contraction alone cannot sustain a rally. Strong demand and improved sentiment are necessary for price expansion. Institutional flows remain subdued, and spot traders show hesitancy.
For Ethereum to enter a sustained bullish trend, multiple factors must align. A cooling-off phase is just one piece of the puzzle. The market needs increased demand, positive sentiment, and renewed institutional involvement.
Until these elements converge, ETH may remain range-bound or face further downside before a significant recovery occurs.
Final Summary
- Ethereum is trading near the $2,000 level for the first time since the consolidation phase of March to May 2025.
- U.S. Spot ETH ETFs recently absorbed only $10.26 million, marking one of their weakest inflow days since launch.
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