(MENAFN- Crypto Breaking) Ethereum Price Surges but Faces Resistance Amid Declining Treasury Demand

Ethereum has experienced a notable rebound, trading around $3,077 after climbing 17% from its recent low of $2,620, which was recorded on November 21. Despite this rally, sustained growth towards the $4,000 mark remains elusive due to diminishing treasury buying activity and strong overhead resistance.

Key insights indicate a sharp decline in ETH demand from corporate treasuries, with a potential structural shift affecting market dynamics. Analysts warn that if the trend of declining treasury acquisitions persists, the long-term bid for Ethereum could weaken significantly, threatening further price appreciation.

Collapse in Ethernet Treasury Demand

Data from Bitwise highlights a dramatic 81% drop in ETH purchases by digital asset treasury companies, decreasing from a peak of 1.97 million ETH in August to only 370,000 ETH in November. This stark reduction signals a potential shift away from the previous“Digital Asset Trend” (DAT) strategy, which saw institutions accumulating ETH to strengthen their holdings.

Max Shannon, senior research associate at Bitwise, warns that the declining structural bids could result in the disappearance of Ethereum's bid support if demand continues to evaporate while supply remains unchanged. The decreasing inflow is also linked to shrinking market NAV levels and declining purchasing power among smaller firms, adding to concerns about liquidity and sustained demand.

Additional data from Capriole Investments illustrates a significant drop in daily institutional ETH purchases, which have fallen from a peak of over 121,000 ETH in mid-August to actively selling at a rate of 5,520 ETH per day-underscoring diminishing institutional interest.

Ethereum: Daily rate of institutional buying. Source: Capriole Investments

Some large players, such as Bitmine-managed by Wall Street strategist Tom Lee-continue to acquire ETH, but with declining volumes and dollar values, indicating a depletion of active market participants. Despite ongoing purchases, the overall market structure points to a collapsing demand model, with ETH sitting on substantial unrealized losses among treasury companies.

Resistance Levels and Technical Outlook

On the technical front, Ethereum's recent rally has seen it regain key support levels around $3,080, where the 50-week and 100-week simple moving averages (SMAs) converge. A daily close above this threshold could signal bullish momentum returning, with many analysts highlighting $3,100 as a critical resistance zone. A sustained move above this level could pave the way for the price to target the 200-period SMA at approximately $3,500.

The daily chart also suggests that Ethereum is breaking out of a falling wedge pattern at $3,000. A confirmed daily close above this trendline resistance could set the stage for an upward move toward $4,150, a level projected by multiple valuation models as an attainable target for a justified rally.

ETH/USD daily chart. Source: TradingView

Overall, while Ethereum faces resistance from both technical and demand-side perspectives, a breakout above critical support and resistance levels could herald a more bullish phase, aligning with valuations that suggest ETH remains undervalued relative to its fundamentals.

This analysis does not constitute investment advice. Every trading decision involves risks, and it is essential for investors to perform their own due diligence before engaging in market activities.

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