Ethereum has encountered resistance in maintaining its position around the $4,000 level following the successful deployment of the Dencun upgrade at 1:55 PM UTC on March 13.
The much-anticipated hard fork, designed to reduce transaction fees on layer-2 networks and improve Ethereum’s overall scalability, has triggered a selling wave, causing the price of Ethereum to dip below key Fibonacci retracement levels and lose the crucial $4,000 milestone.
The current market sentiment for Ethereum is shifting towards a bearish outlook, as various on-chain indicators suggest a potential further downturn in its price. This shift in sentiment comes nearly a year after the Shanghai upgrade in April 2023.
Ethereum drops below $4,000
Moreover, the one-month call-put skew for Ether, which reflects market sentiment in options trading, has turned negative, signaling a preference for put options that protect against price drops. This trend is also observed for the 60-day period, although the 90-day and 180-day outlooks remain positive, according to Deribit data tracked by Amberdata.
QCP Capital observed a minor decrease in ETH spot-forward spreads, which is in contrast to the wider spreads observed in Bitcoin markets. This suggests that if ETH prices were to experience a substantial decline, it could result in tighter forward spreads as leveraged long positions are liquidated.
After the recent selling pressure, buyers were unable to sustain the ETH price within a buying demand zone, as sellers strongly defended the $4,000 level. As a result, the ETH price dropped below immediate Fibonacci channels and fell below the important $4,000 milestone. However, buyers are still accumulating during pullbacks and defending the support lines.
