Ethereum is under pressure as bearish sentiment intensifies across the market. Over the past week, the leading altcoin has lost 13% of its value, which has now pushed it below the critical $4,000 level.
With the negative trader sentiment and institutional pullback, ETH now faces the risk of testing even lower price levels.
Institutional Pullback and Falling Long/Short Ratio Raise Concerns
ETH’s falling long/short ratio highlights the growing bearish bias against the coin in its futures market. At press time, the ratio stands at 0.95, indicating more traders are betting against its recovery in the near term.
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ETH Long/Short Ratio. Source: Coinglass
An asset’s long/short ratio compares the number of long and short positions in its futures market. When the ratio is above 1, there are more long than short positions, indicating that traders are predominantly betting on a price increase.
Conversely, as seen with ETH, a ratio under one shows that the majority of traders are betting on a price decline, signaling stronger bearish sentiment and anticipation of further downside.
Additionally, the steady outflows from spot ETH ETFs this week indicate that institutional investors are pulling back, reducing support for the asset. Per SosoValue, net outflows from these funds have totaled $217 million this week, highlighting the retreat by larger market participants.
Total Ethereum Spot ETF Net Inflow. Source: SosoValue
When institutions sell or withdraw funds, it can exacerbate downward momentum, leaving the asset more vulnerable to short-term volatility. The gradual exit of these key investors makes it more likely that ETH could test lower support levels in the near term.
Ethereum Faces $4,000 Test as Bears Gain Ground
ETH trades at $3,981 at press time, hovering above the support floor at $3,875. If this price level gives way, ETH could dip further to $3,626.
ETH Price Analysis. Source: TradingView
Conversely, if demand returns, the coin’s price could regain strength and climb to $4,211.
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